Markets ended marginally higher, paring sharp intra-day gains, after profit booking was seen in late trades because of growth concerns.
However, firm gains in Europe boosted sentiment. Key European indices, London's FTSE-100 was up 0.7%, Germany's DAX was up 1.4% and Paris CAC-40 was up 1.6% on hopes that the European leaders, at a meeting scheduled for December 9, would arrive at a solution to resolve the debt crisis in the region.
Profit booking was seen after the Finance Minister Pranab Mukherjee said that India's growth target of 9% remains a pipe dream.
It was a foregone conclusion the Indian economy would not clock nine per cent growth this year as expected at the time of preparing the Budget.
But, now, even eight per cent looks extremely unlikely.
The Reserve Bank of India's tight monetary stance, coupled with problems in the coal sector and uncertain global recovery, led to industrial growth sinking in September. Growth hit a two-year low of 1.9 per cent, against 6.1 per cent a year ago.
"I won't comment on the 2011-2012 full GDP numbers, but one thing is sure, that all the earlier talk of 9-10 per cent GDP growth is unfounded, though the long-term growth prospects of the Indian economy remain fully intact," chief statistician TCA Anant said.
Among Asian markets, the Nikkei average hit a four-week high on Wednesday as investors warmed to the view that European policy-makers will come up with convincing steps this week to help resolve the region's debt crisis.
The benchmark Nikkei added 1.7% to 8,722.17, its highest close in four weeks and ending above its 75-day moving average for the first time since late October. The broader Topix index gained 1.6 per cent to 749.63.
In the domestic market the Sensex topped the 17,000 mark in intra-day for the first time since November 15, 2011 to finally end up 72 points at 16877.
It reached an intra-day high of 17,004 levels and an intra-day low of 16,782 levels. The Nifty gained 23 points to end at 5,063 after touching nearly 5,100 in intraday trades.
Foreign Institutional Investors remained buyers in equities worth Rs 1,465
cr in the past four trading session.
Gains were led by oil, technology, metals and financial shares.
Oil shares were led by index heavyweight Reliance Industries up 0.2% and ONGC which rose 1.6%.
Technology shares rose on the back of a weakening rupee and hope that business environment in Europe post the summit on December 9.
Wipro and Infosys were both up between 2-3%.
Metal shares rose after global credit agency Standard and Poor announced a stable rating outlook on China, the world's largest consumer of copper and aluminium.
Hindalco and Sterlite Industries were both up over 2% each.
Financial shares rose on expectation that the Reserve Bank of India may pause interest rate hike after government data last week showed that food inflation had moderated.
State Bank of India was up 1.9% and HDFC was up 1.4%.
FMCG shares like ITC and HUL gained by over 0.5% each. According to Somil Mehta, Senior Technical Analyst (Equity), Sharekhan, "FMCG majors HUL and ITC are likely to consolidate within a range.
The range for HUL would be Rs 385-410 and Rs 200-210 for ITC. Among other shares in this pack, Dabur is looking positive at current level with a target price of Rs 105," BSE Healthcare and Consumer Durable indices tumbled between 1-2%. Lupin, Sun Pharma, Dr Reddy's and Glenmark plummeted between 2-4%.
Among other shares, UltraTech Cement was up 2 % at Rs 1,212 after reporting 16% year-on-year growth in dispatches to 3.09 million for November 2011.
Meanwhile, stepping back to break the logjam in Parliament, the government today put the controversial decision on FDI in retail on the backburner till a consensus is evolved, a proposal the entire opposition and the dissenting allies accepted without reservation.
The move resulted in a mixed reaction among the retail sector stocks in late noon deals. While Shoppers Stop and Welspun Global lost ground, Pantaloon Retail and Provogue (India) moved up around 5% each.
Midcaps and Smallcaps ended marginally higher with BSE Midcap index inching up 0.20% and Smallcap index climbing up 0.27%.
The market breadth ended slightly positive with 1,448 shares advancing and 1,364 shares declining.
Markets ended marginally higher, paring sharp intra-day gains, after profit booking was seen in late trades because of growth concerns.