Indian equity benchmarks gained on demand for metal stocks after broking firm CLSA upgraded its outlook on the sector; declining technology, energy shares helped arrest early volatility.

After a sharp rise amid volatility in morning trading, the Standard & Poors BSE Sensex closed lower at 57.92 points at 31,213.36 on Thursday, gyrating in a 50-point range throughout the day. The Nifty closed below the 9,650 mark, lower by 16.65 points at 9,647.25.

The RBI's reduction of the SLR (Statutory Liquidity Ratio) -- the amount of money banks need to invest in government securities — in its monetary policy review on Wednesday by 50 basis points helped boost investor sentiment, especially in shares of state-owned lenders, with the Nifty PSU Bank Index gaining 1.2 percent.

The BSE Midcap and Smallcap indices was up 0.2-0.3 percent, while the BSE Sensex Next index closed 0.07 percent, well above its traditional benchmark.

The Sensex had climbed 0.2 percent to 31,335 in early morning trade on Thursday while the NSE Nifty rose 0.2 percent to 9,688 on the back of what investors perceived as the "dovish" stance of the Reserve Bank of India in its post-monetary policy commentary announced on Wednesday. However, these were offset by losses in technology, energy and selecting banking shares. Investors also held back on taking big positions ahead of key events in Europe and the US.

Indian equity benchmarks gained led by metal stocks after broking firm CLSA upgraded its outlook on the sector while technology shares declined.

A total of 59 stocks registered a fresh 52-week high in trade on Thursday, while 23 stocks touched a new 52-week low on the NSE.

Shares of Tata Steel on BSE saw a 3.8 percent intra-day uptick to Rs 509.5, the highest since May 26 this year, after research firm CLSA raised its price target on the stock to Rs 710 from Rs 570, while reiterating a buy rating.

A total of 59 stocks registered a fresh 52-week high in early trade on Thursday, while 23 stocks touched a new 52-week low on the NSE.

The monetary policy committee had on Wednesday left the policy repo rate at a 6-and-a-half year low of 6.25 per cent and the reverse repo rate at 6.0 percent. It cut consumer inflation expectations to 2.0-3.5 per cent in the first half (April-September) of fiscal 2018 from 4.5 percent, and to 3.5-4.5 percent in the second half (October-March) of fiscal 2018 from 5 per cent.

This followed the RBI maintaining a "neutral" policy stance and lowering its inflation projections as it delivered a less hawkish policy statement on Wednesday, leaving key interest rates unchanged.