Indian shares rose on Tuesday tracking broader Asian markets after two sessions of losses, as U.S. Treasury yields edged higher, easing concerns about a recession in the world's largest economy.
Also supporting the equities was a stronger rupee, which rose as much as 0.25 percent to 68.77 against the dollar. However, the outlook for global economy remained murky as investors weighed the probability of whether the U.S. economy is in danger of slipping into recession.
"Domestic markets are well placed, sentiments are still positive, the selloff was mainly because of fears of global slowdown and some correction after last week's rally," said Neeraj Dewan, director, Quantum Securities.
"There is a sense that the same government may continue so there will be stability at the centre....this is supportive of our market."
Last week, Indian equities rallied on optimism that the current coalition government led by Prime Minister Narendra Modi would return to power after the general election starting next month.
India will hold a general election in seven stages starting April 11 and about 900 million citizens will be eligible to vote in the mammoth exercise lasting over a month.
The broader NSE Nifty rose 0.23 percent to11,380.30 as of 0505 GMT. The benchmark BSE Sensex gained 0.21 percent to 37,890.26.
Financials drove gains on the Nifty index, with the Nifty Bank index rising as much as 0.83 percent.
The Nifty auto index snapped five consecutive sessions of losses to rise as much as 0.71 percent.
Shares of Jet Airways Ltd rose as much as 8.93 percent after founder Naresh Goyal and wife Anita Goyal exited the company.
Shares of Mindtree Ltd were down 0.2 percent. The company's board is due to meet later in the day to decide about a share buyback proposal as it faces a $475 million hostile takeover bid from Larsen & Toubro
IT stocks like Infosys Ltd and Wipro Ltd were among the biggest losers on the index, falling as much as 2.06 percent and 1.21 percent, respectively.
Spicejet Ltd slipped as much 5.05 percent, while Interglobe Aviation Ltd lost 2.33 percent.