The Sensex ended 8.12 points higher at 27,507.54, while the 50-share Nifty closed 1.3 points higher at 8,284.
Metal stocks were the lead gainers today as China's services sector picked up slightly in December throwing hopes to offset further weakness in the manufacturing sector, which hurt global demand for metals. China is world's largest consumer of steel, copper and aluminum.
JSPL was the top gainer in Nifty, up 4 per cent, while Sesa Sterlite, Tata Steel, Hindalco Industries gained between 0.5 to 2.5 per cent. The BSE metal index gained 1.07 per cent.
Telecom stocks like Bharti Airtel and Idea gained 2.89 per cent and 3.58 per cent respectively after government on Wednesday fixed 3G spectrum auction base prices 19 per cent lower than the 2010 auction prices.
Maruti Suzuki gained 0.33 per cent after the company reported better-than-estimated sales numbers for the month of December.
Dr. Reddy's Lab fell 1.1 per cent to be the top loser in Nifty followed by NTPC, which was down 1.08 per cent.
However broader indices posted modest gains. The BSE midcap index gained 0.65 per cent and the smallcap index gained 1.25 per cent.
Mothoot Finance closed 12 per cent higher after the company acquired a Sri Lankan company to start gold loan business in Sri Lanka.
SpiceJet and Jet Airways gained 4.95 per cent and 10 per cent respectively after jet fuel prices were cut by around 12.5 per cent.
The Nifty ended 2014 with a 31.4 percent gain, and analysts expect the momentum to sustain this year on hopes the government will announce more economic reforms and the Reserve Bank of India will soon start cutting interest rates.
"Indian markets have outperformed its Asian and global peers. Our market remains the hot investment option. And, this growth is expected to continue as cyclical, rate-sensitive and investment-oriented stocks find flavour with investors," said Kamlesh Rao, CEO of Kotak Securities.
(With inputs from Reuters)