Indian shares recovered from the previous session's fall to trade slightly higher on Tuesday, as investors bought into battered financials such as HDFC Bank Ltd and Kotak Mahindra Bank Ltd, but broader sentiment was cautious amid lingering concerns about the escalating North Korea crisis.
Asian shares were mostly defensive on North Korea worries though MSCI's dollar-denominated index of Asia-Pacific shares outside Japan was up around 0.2 percent due to gains in Chinese equities. Japan's Nikkei closed 0.6 percent lower.
The U.S. markets were shut on Monday on account of Labour Day.
In India, financials accounted for most of the gains. The Nifty Bank index rose as much as 0.6 percent after ending 0.8 percent lower in the previous session, but analysts warned sentiment was cautious overall.
"Markets are nervous and that is why they are not scaling new highs. There are a lot of inherent strengths whereby levels are not broken and markets continue to be in rangebound mode," said Vaishali Parekh, a research analyst with Prabhudas Lilladher Pvt Ltd.
The broader Nifty was up 0.19 percent at 9,931.55 as of 0640 GMT, while the Sensex was 0.22 percent higher at 31,772.50.
Both indexes had fallen around 0.6 percent each on Monday.
The Nifty Financial Services index climbed as much as 0.5 percent after closing 0.7 percent lower in the previous session.
Among the top gainers on the Nifty 50, Tech Mahindra Ltd, Asian Paints Ltd and Ambuja Cements Ltd climbed between 1.7 percent and 3 percent, recovering well from Monday's losses.
Hotel Leelaventure Ltd rose as much as 8.1 percent to its highest in three months after the Economic Times newspaper reported that U.S. private equity fund Marigold Capital & Investments would buy the company's hotel in Chennai, citing unnamed sources.