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However, a depreciating rupee and unabated foreign fund outflows capped the gains, traders said.
The 30-share BSE Sensex rallied 562.75 points or 0.94 per cent to settle at 60,655.72. The broader NSE Nifty climbed 158.45 points or 0.89 per cent to 18,053.30.
Larsen & Toubro topped the Sensex gainers chart with a jump of 3.51 per cent, followed by Hindustan Unilever, HDFC, HCL Technologies, HDFC Bank and Reliance Industries.
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The market breadth was in favour of the bulls, with 22 advances and 8 declines.
“The domestic market is attempting to gain, in comparison to its weak YTD performance, which was caused in anticipation of soft Q3 results and Union Budget. We started the third quarter results on a shaky note, but the latest set of financial announcements from IT and banking blue chips are encouraging.
“Heavyweights are also pushing the counter… (following) fall in windfall tax. Given the positive undercurrents, the trend should continue in the short term. However, a lot will depend on the second line of Q3 results, the Budget outcome, and the Fed policy statement,” said Vinod Nair, Head of Research at Geojit Financial Services.
The government has reduced the windfall profit tax levied on domestically-produced crude oil as well as on the export of diesel and ATF, in line with softening international oil prices, according to an official order.
“Markets reversed Monday’s fall and gained nearly a percent amid volatility… The bulls are trying hard to cap the damage amid the prevailing consolidation phase and awaiting some trigger for further recovery.
“We feel buying in select index majors may result in some respite ahead but not enough to trigger the next directional move. We thus reiterate our view to focus on stock selection and risk management until we see some decisive signal,” said Ajit Mishra, VP – Technical Research, Religare Broking Ltd.
The broader market fell marginally in Tuesday’s trade, with the BSE smallcap gauge declining 0.13 per cent and midcap index falling by 0.06 per cent.
Among sectoral indices, utilities jumped 1.48 per cent, power climbed 1.42 per cent, FMCG (1.15 per cent), realty (1.10 per cent), energy (0.97 per cent), teck (0.87 per cent), oil & gas (0.85 per cent), IT (0.79 per cent) and financial services (0.27 per cent).
World markets retreated after China reported a GDP growth of just 3 per cent for 2022 — the lowest in over four decades, triggering fresh fears of a global recession.
In Asia, equity markets in Seoul, Shanghai and Hong Kong ended lower, while Tokyo settled in the green.
Equity exchanges in Europe were trading in the negative territory in mid-session deals. Markets in the US were shut on Monday on account of Martin Luther King Jr Day.
International oil benchmark Brent crude rose 0.67 per cent to USD 85.03 per barrel.
The rupee tumbled 19 paise to close at 81.77 (provisional) against the US dollar on Tuesday, tracking a rebound in the greenback overseas and firm crude oil prices.
Foreign Institutional Investors (FIIs) offloaded shares worth a net Rs 750.59 crore on Monday, according to exchange data.