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Indian shares advanced on Thursday, led by a rally in energy and public sector banks, and supported by a post-results jump in Mahindra & Mahindra.

The NSE Nifty 50 index settled 0.32% higher at 21,910.75, while the S&P BSE Sensex gained 0.32% to 72,050.38.

Both the benchmarks struggled for direction earlier in the day, before consolidating gains in the final two hours.

Indian markets have remained resilient to hot U.S. inflation data, released on Tuesday, unlike Asian peers, which fell in the previous session.

The benchmark Nifty 50 has added 1.36% in the last three sessions.

"U.S. inflation data was a clear indicator that rate cuts will be delayed. That triggered foreign selling but domestic flows have been extremely robust, supporting the markets," said Anita Gandhi, founder and head of institution at Arihant Capital.

Domestic institutional investors (DII) have bought 135.45 billion rupees (about $1.6 billion) of shares on a net basis in February so far, cushioning sales of 111.07 billion rupees by foreign institutional investors on a net basis.

Public sector banks jumped 3.27%, taking gains in the last three sessions to about 8%.

State Bank of India, which did not participate in the PSU bank rally in 2023, jumped 2.46% on Thursday to take its year-to-date rise to 19%.

Energy and oil and gas gained 1.75% and 2.46%, respectively, on the day, sustaining their post-results rally.

Morgan Stanley reiterated its "overweight" rating on NTPC and Power Grid, and upgraded Bharat Heavy Electricals, forecasting a capex boost for the sector. NTPC, Power Grid and BHEL gained between 1.3% and 3.5%.

Auto stocks advanced 1.35%, led by Mahindra & Mahindra, which jumped 6.52% as analysts expected profitability to remain steady for the company.

The broader, more domestically-focussed small- and mid-caps climbed 1.3% and 1%, respectively, outperforming the blue-chip indexes.

($1 = 83.0250 Indian rupees)