The Sensex rises 1.05 percent and the Nifty gains 1 percent. Leading the gains: HDFC Bank rose 2 percent, Mortgage lender HDFC rises 2.05 percent while ITC is up 1.13 percent.
Asian shares gain for the seventh day in a row on Tuesday while commodities rise after a deal on new debt targets for Greece and a political agreement on disbursing the next installment of aid.
However, a lot depends on the government's ability to pass pending bills given that the opposition lawmakers have paralysed the parliament, demanding rollback of the government's flagship reforms announced in September.
Moody's says that the outlook on its Baa3 rating for India is stable, citing the country's large, diverse economy and strong gross domestic product growth as supportive of the rating.