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Indian shares advanced on Wednesday, led by index heavyweights HDFC Bank and Reliance Industries and buoyed by a post-results rally in an earnings-heavy session, while investors keenly awaited the U.S. monetary policy decision due later in the day.

The blue-chip NSE Nifty 50 index rose 0.95% to 21,725.70 while the S&P BSE Sensex gained 0.86% to 71,752.11 at close.

The rise came on the back of a 2% drop in both benchmarks on Monday and a 1% rise on Tuesday.

Despite Wednesday's gains, the Nifty 50 ended the month little changed, after rising nearly 14% in the last two months of 2023.

"The valuations, across most segments in the markets, have shot up substantially, but liquidity is flush, which is causing the bouts of buying and selling seen over the last three sessions," Raghvendra Nath, managing director at Ladderup Wealth Management, said.

The Federal Reserve policy decision and commentary is keenly awaited for clues on the rate trajectory in the world's largest economy.

"Any hint of keeping rates higher-for-longer given the strong U.S. economic data could weigh on markets across the world, which have priced in early rate cuts," Ladderup's Nath added.

Investors also await the Indian government's interim budget on Thursday morning, which is likely to trigger stock-specific movements in response to sectoral allocations.

Nifty 50 heavyweights HDFC Bank and Reliance Industries added about 1.25% each on Wednesday, after dropping 0.7% and 2.8%, respectively, on Tuesday.

With investors chasing safety, HDFC Bank and Reliance "are obvious choices" given their long-term growth outlook and relatively attractive valuations, Nath added.

On earnings-driven moves, Dr. Reddy's Laboratories, Sun Pharmaceutical Industries, Maruti Suzuki India, and Bank of Baroda jumped between 2.3% and 5%, helped by strong results.