The BSE Sensex rose more than 1 percent on Tuesday morning, led by gains in index heavyweights Reliance Industries (RELI.NS) and ICICI Bank (ICBK.NS), and were poised for their best month in at least ten.
Shares in top lender State Bank of India (SBI.NS_2>SBI.NS) rose more than 3 percent after it said the Indian government will infuse $1.6 billion into the bank through a share purchase, a move that will shore up its capital base.
Tata Global Beverages (TAGL.NS) jumped as much as 6.2 percent after Starbucks Corp (SBUX.O), the world's largest coffee company, signed a deal with the Indian company to open cafes in India.
At 10:02 a.m. (0432 GMT), the main 30-share BSE index .BSESN was up 1.15 percent at 17,056.67, with all but five of its components trading in green. The index had slumped 2.15 percent on Monday, snapping a six-session winning streak.
With a positive scenario building up on the Greek debt front and with positive global cues, the market has managed to recover, said K.K. Mital, head of portfolio management at Globe Capital Market in New Delhi.
But volatility and some amount of profit-booking cannot be ruled out as the day progresses, he said.
The main index is up more than 10 percent in January, which would be its first monthly rise in three and the best month since at least March last year. The index gained 9.1 percent in March last year and 11.7 percent in September 2010.
Foreign funds have been net buyers of about $2 billion of Indian shares in January, after net outflows of about $500 million last year.
No. 2 lender ICICI Bank (ICBK.NS), which is expected to report its fiscal third-quarter net profit rose 12 percent later in the day, gained 2.4 percent to 872.65 rupees. The bank sector index was up 2 percent.
Energy major Reliance Industries (RELI.NS), India's most-valuable firm and the heaviest stock in the main index, rebounded 2.3 percent to 812.75 rupees, after shedding more than 3 percent in the previous session.
Traders are also watching out for data on fiscal deficit, consumer price index-based inflation for December and the final 2010/11 GDP due later in the day.
The 50-share NSE index was up 1.03 percent at 5,139.60. In the broader market, there were 887 gainers for 366 losers on total volume of about 140 million shares.
Most other Asian markets were trading higher on Tuesday after Greek Prime Minister Lucas Papademos raised hopes for a deal to be reached this week to avoid a default, but markets were starting to worry that Portugal might need a second rescue.
STOCKS ON THE MOVE
* State-run Punjab National Bank (PNBK.NS) was up 2.3 percent after its board approved issue of shares on preferential basis to the Indian government aggregating to 12.85 billion rupees.
* Drugmaker Glenmark Pharmaceuticals (GLEN.NS) fell 4.7 percent to 297 rupees after its December quarter net nearly halved.