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 Indian shares logged gains in a special one-hour "muhurat" trading session on Friday to mark the festival of Diwali, led by auto stocks on the back of positive monthly sales data.

The NSE Nifty 50 rose 0.41% to 24,304.35, while the BSE Sensex gained 0.42% to 79,724.12, both snapping a two-day losing streak.

Many traders believe that gains made during "muhurat", which means auspicious in Hindi, bring prosperity and wealth in the year ahead.

Since last Diwali, the Nifty has risen about 25% up to last close, aided by policy continuity, stable macroeconomic and corporate growth outlook and rising retail investor participation.

However in October, the benchmarks snapped a four-month winning streak and logged their worst monthly performance since March 2020, hurt by record monthly foreign outflows and lacklustre corporate earnings.

On Friday, all the 13 major sectoral indexes advanced. The auto index gained 1.24% and was the top sectoral gainer by percentage.

Mahindra & Mahindra climbed 3.27% after reporting a 25% jump in October car sales to dealers, helped by festive demand. It was the top Nifty 50 gainer as well.

The broader, more domestically focussed mid and small-caps rose about 0.7% and 1%, respectively.

"Despite the recent fall in the markets, the optimism during the muhurat trading signifies positive investor sentiment," said Vikas Gupta, chief executive at OmniScience Capital.

While the recent correction has made segments in domestic markets attractive in terms of valuations, the near-term trajectory will depend on the U.S. non-farm payrolls data on Friday and U.S. presidential elections next week besides domestic corporate earnings and foreign outflows, two analysts said.

Among individual stocks, construction company NCC gained 4.60% after securing orders worth 34.96 billion rupees in the previous month.

Hospital-chain operator Narayana Hrudayalaya fell 2% on posting a lower quarterly profit.