The BSE Sensex ended higher by 84 points at 17,588, while the Nifty ended at 5,360, up 26 points.
During the day, the BSE Sensex had touched the day's high at 17,772 and the day's low at 17,495.
According to data released on Monday, Index of Industrial Production or the IIP grew by 6.8% year-on-year in January 2012.
The cumulative growth for the period April-January 2011-12 stands at 4.0% over the corresponding period of the previous year, the government data shows.
A good industrial output print for February would mean India's economy is moving to a normal growth trajectory, the deputy chairman of the Planning Commission, Montek Singh Ahluwalia, said today.
Meanwhile, European markets are mixed today. At 1600 hours, the DAX was up 0.33% while the CAC 40 gained 0.14%.
The FTSE 100 was off 0.03%.
In Asia, Japan's Nikkei share average dipped after breaking above 10,000 to a fresh seven-month high as hedge funds locked in profits following a 3.7% rally in the previous two sessions and 17% so far this year.
The Nikkei slipped 0.4% to 9,890.
The Shanghai Composite index ended marginally lower by 0.19% while the Hang Seng ended at 21,134, up 0.23%.
Back home, BSE Capital Goods, Consumer Durables, Realty and Oil & Gas indices, up 1-3% each, led the gains.
According to the industrial output data, the capital goods sector registered a contraction of just -1.5% in January compared with a contraction of -16.3% in December.
Havells India, Larsen & Toubro, BEML, Siemens and Suzlon Energy, up 2-4% each, were the prominent gainers from the Capital Goods' space.
L&T gained 4%, extending its Friday's 5% rally after the Board decided to bifurcate the role of Chairman and Managing Director into two positions.
The company has appointed Mr K Venkataramanan as Chief Executive Office and Managing Director with effect from April 1, 2012
There's room for a 50-bp rate cut, says SBI chief
Global and Domestic cues weigh on market sentiment
Rate cut buzz to boost growth gains momentum
6.8% industrial growth indicates strong recovery: Pranab
Sensex remains expensive against world market