The BSE Sensex posted its biggest gains of the month on Tuesday, as investors picked up software services exporters such as Infosys that have recently under-performed and defensive shares such as Hindustan Unilever.
Shares have recovered after hitting their yearly lows on Friday, although the mood remains largely cautious ahead of the 2013/14 budget, to be unveiled on February 28.
Traders say a plan that seeks to narrow the country's fiscal and current account deficits would be key in reviving share markets that have largely fizzled out this month.
"Some game-changing reforms in area of deficit management is expected from budget," said Deven Choksey, MD, KR Choksey Securities, calling gains on Tuesday more liquidity-driven than a genuine rally.
The BSE Sensex rose 0.69 percent, or 134.64 points to end at 19,635.72, marking its biggest daily percentage gain since January 25, and a recovery after ending Friday at its lowest close of the year.
The 50-share Nifty rose 0.70 percent, or 41.50 points, to 5,939.70, also posting its biggest daily gain since January 25.
Shares of software services exporters were among the day's leading gainers on continued hopes earnings will improve in the fiscal year starting in April on the back of an improving global economy.
Tata Consultancy Services Ltd
Defensives shares that have under-performed markets this year also gained.
Hindustan Unilever Ltd
Among other gainers, ACC Ltd
The approvals removed an uncertainty that had been weighing on the Indian companies, as some investors had feared a protracted process over a decision that had been unpopular with shareholders.
Shares in DLF Ltd
Hotel Leelaventure Ltd
However, among decliners, Bharti Airtel Ltd