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India's stock benchmarks bounced back from early losses, aided by a recovery in energy and financials, after booking profits at record high levels in the previous session even as the global market rally lost steam.

The blue-chip NSE Nifty rose 0.50% to 21,255.05, while the S&P BSE Sensex advanced 0.51% to 70,865.10.

"We think there is still room on the upside for Indian markets," said Sanjiv Bhasin, director at IIFL Securities, citing rising foreign inflows on India's demographic premium, consumption growth, easing global rate outlook and robust domestic growth momentum.

The Nifty 50 is up 5.57% so far in December, on course to log its best monthly performance in 2023, despite profit-taking on Wednesday.

High-weightage energy and financial stocks, gained 1.77% and 0.59%, respectively, on the day, leading the index gains. They had dropped 2.68% and 1.09%, respectively, in the previous session.

Reliance Industries, the second heaviest stock in Nifty 50, gained 1.4% on multiple block deals.

The small-caps and mid-caps gained about 2% and 1.7%, respectively, after a sharp slide in the previous session.

"The prevailing expensive valuations in the small- and mid-cap segments of the market can make these stocks particularly sensitive to changes in market trajectory, sentiment and external factors," said Rahul Sharma, managing partner at Equity 99.

The small- and mid-caps have gained 51% and 42% in 2023 so far, respectively, compared to a 17.4% rise in the Nifty 50.

Media surged 2.49%, powered by a 4.07% rise in top constituent Zee Entertainment Enterprises after the company said it is in talks with Sony Group's India unit to extend a merger deadline.

Cochin Shipyard and Mazagon Dock Shipbuilders gained 6.19% and 3.65%, respectively, after signing contracts with India's Ministry of Defence.

Asian shares fell after a drop in Wall Street equities overnight as the focus in the United States turned to third-quarter growth data on Thursday and a key inflation reading on Friday. [MKTS/GLOB]