The BSE Sensex rose 0.73 percent on Tuesday, mirroring global market gains, after a takeover news lifted Wall Street overnight and as the Japanese economy shrank much less than expected.
Asian shares drew succour on Tuesday from news that Google has offered to buy Motorola Mobility Holdings Inc for about $12.5 billion in cash. The deal helped push up major Wall Street indexes by as much as 2.2 percent.
At 10:30 a.m. (0500 GMT), the 30-share BSE index was trading up 0.71 percent at 16958.68 points, with 23 of its components advancing. The index, which had lost about 7.5 percent so far this month, opened up 1.1 percent on Tuesday.
"Sentimentally, because of the U.S. markets, the market is looking a little steady today. The fundamentals have not changed as far as the corporates are concerned; economic fundamentals also have not changed much," said Deven Choksey, managing director of brokerage K.R. Choksey.
State Bank of India rose 1.65 percent, reversing losses at open, after the country's largest lender said it expects a stronger second quarter after provisions for sour loans coupled with treasury losses led to a second straight drop in quarterly profit.
The BSE Banking index rose 0.80 percent with ICICI Bank and HDFC Bank both gaining.
Investor focus is on the July headline inflation data, due at noon, for cues on the central bank's Sept. 16 policy move.
India's wholesale price index probably rose an annual 9.2 percent in July, slightly slower than June's 9.44 percent, as policy tightening by the Reserve Bank of India was partially offset by surging food prices, a Reuters poll showed.
Reliance Communications rose as much as 1.4 percent, after it reported a sharper-than-expected 37 percent fall in quarterly profit, its eighth straight quarter of profit drop, as the country's No. 2 mobile carrier by subscribers struggles with high debt.
Its bigger rival Bharti Airtel rose 1 percent, while No.4 mobile carrier by subscribers Idea Cellular gained 1.72 percent.
Shares in Coal India, the world's largest coal miner, rose 2 percent after the company on Friday said its fiscal first quarter profit surged 64 percent, beating street estimates, as stronger sales and a price increase effected in February boosted margins.
Markets were closed on Monday for a national holiday.
The 50-share NSE index was up 0.66 percent at 5106.50 points.
In the broader market, 744 advancers outnumbered 555 decliners on volume of 137.1 million shares.
"I don't think there is anything in particular in the market to show the upside. In fact, we expect the market to pull back, because volatility is sharply down in the derivatives market," Choksey said.
The MSCI Asia ex-Japan index, which had lost around 14 percent over the past two weeks as part of a global market rout in which billions of dollars were wiped off share indexes, was up 0.97 percent, while Japan's Nikkei was steady from Monday's close.
STOCKS ON THE MOVE
* Punj Lloyd Ltd fell 4.6 percent after the engineering and construction firm posted a net loss for April-June.
* Emami Ltd rose 2.1 percent after the personal care products maker said net profit for April-June rose 18 percent.
MAIN TOP 3 BY VOLUME ON NSE
* Resurgere Mines and Minerals on 8 million shares
* Lanco Infratech on 6.9 million shares
* Unitech Ltd on 6.7 million shares