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Indian shares recovered from earlier losses to close higher for a fifth straight session on Thursday, on expectations that the central bank would not be as aggressive as its global peers with monetary policy.

Also boosting sentiment was the rupee's recovery from a record low to end the session higher after the Reserve Bank of India (RBI) likely sold dollars to support the currency.

The NSE Nifty 50 index advanced 0.3% to 17,563.95 at the close, while the S&P BSE Sensex finished 0.16% higher at 59,202.90, lifted by bank and IT stocks.

Both indexes had fallen more than 0.5% each earlier amid weak sentiment in the broader market and as U.S. Treasury yields hit multi-year highs, which sent the rupee sliding.

"The sharp increase in U.S. yield, global market weakness, and unexpected drop in the INR (rupee) promoted selling pressure in the domestic market," said Vinod Nair, head of research at Geojit Financial Services.

"The strong domestic market, on the other hand, recovered from losses as the RBI is expected to be less aggressive as domestic inflation is thought to have peaked."

Equities in the broader market fell and bond yields firmed ahead of central bank rate meetings in the next few weeks where hikes are expected. The Fed is expected to raise rates in its next two policy sessions.

In contrast, the RBI has indicated a softer guidance on policy rates and said it expects inflation to ease and economic activity to expand.

In the market, Nifty's public sector bank and IT indexes were the top performers among the sub-indexes, closing 1.88% and 1.33% higher, respectively.

UPL Ltd settled 5.4% higher and was the top gainer on the Nifty 50 after a media report said the agrochemicals firm was looking to raise funds from KKR & Co and others.

Cigarettes-to-consumer goods maker ITC Ltd closed at a record high ahead of its quarterly results.