The benchmark indices ended higher amid buying in the PSU bank, infra and energy stocks. The Sensex closed at 40,469.70, up 185.51 points, while Nifty was up 55.60 points at 11,940.10. Bharti Infratel, Bharti Airtel, Axis Bank, Reliance Industries and Power Grid Corp were among major gainers on the Nifty, while Yes Bank, M&M, TCS and Tata Steel were among the losers.
About 1140 shares have advanced, 1371 shares declined, and 190 shares are unchanged as the market closed on Tuesday.
Earlier Sensex and Nifty opened higher in the morning, but 33 of the Nifty50 stocks were trading in the red and only 16 advanced during the early trade.
Telecom scrips continued its strong performance despite the two biggest telecom companies -- Bharti Airtel and Vodafone -- announcing tariff hikes. While Airtel surged over 5 per cent on the NSE, Vodafone Idea (VIL)advanced nearly 18 per cent to Rs 5.25 apiece. On Monday, VIL closed with 25 per cent gain on a possible government led revival.
At 9.43 am, Sensex was trading higher by 45.22 points at 40,329.41 and the Nifty was up 11.50 points at 11,896.
Bharti Airtel, Tech Mahindra and Axis Bank were the top gainers during the early trade, while heavyweights like TCS, Hindustan Unilever and Vedanta fell the most.
Notably, strong buying interest was seen in the PSU banks stocks. While the Nifty PSU Bank index was up over 4.5 per cent, sharp gains were seen particularly in Oriental Bank of Commerce, up 19 per cent and Syndicate Bank, up 15 per cent.
Central Bank of India gained over 10 per cent followed by Union Bank, J&K Bank, up in the range of 7 to 10 per cent. PNB and SBI advanced in the range of 1 to 3 per cent.
This comes after the Supreme Court last week cleared the way for global steel giant Arcelor Mittal`s Rs 42,000 crore acquisition of debt-laden Essar Steel, after a two year long legal battle that tested India`s bankruptcy law.
World shares, however, touched their highest in nearly two years on Tuesday as investors maintained bets that the United States and China can reach a deal to end their damaging trade war.
The world`s two largest economies are in talks on an initial deal to end an 18-month trade dispute that has damaged supply chains and upset global markets, with Washington due to impose a new round of tariffs on Chinese goods from December 15.
On the global front, bourses in Shanghai, Hong Kong, Seoul and Tokyo were trading on a mixed note amid uncertainty over US-China trade deal.
On the currency front, the rupee depreciated 10 paise (intra-day) against the US dollar to trade at 71.94 in early session.