The Sensex and the Nifty rose over 0.5 per cent at the end of the session on Tuesday owing to firm global cues.
At 3.30 p.m., the Sensex was up 109.10 points or 0.56 per cent at 19,433.87 and the Nifty was up 47.3 points or 0.81 per cent at 5,858.85.
The rally was led by consumer durables (+1.89 per cent), realty (+1.78 per cent), power (+1.68 per cent) and capital goods (+1.4 per cent) sector stocks. FMCG stocks were the only losers and were down 0.05 per cent.
Sun Pharma, Sterlite, Bajaj Auto, Dr Reddy's and L&T were the top five Sensex gainers, while Jindal Steel, M&M, Bharti Airtel, ONGC and HUL were the top five losers.
After tumbling on Monday, the markets got off to a flying start on Tuesday with both benchmark indices opening positive and rallying in the pre-noon trade.
The Nifty opened at 5,835, up 23 points, while the Sensex opened at 19,399, up 74 points.
The rupee opened higher by 83 paise at 59.79 per dollar against 60.62 on Monday resulting in a gap up opening for the Sensex and the Nifty on Tuesday.
European stocks rose for a second day as Alcoa Inc. kicked-off the US earnings reporting season with results that beat analysts’ estimates. US index futures and Asian shares also jumped.
Stoxx 50 was up 21.32 points or 0.8 per cent at 2,672.17, FTSE 100 jumped 64.95 points or 1.01 per cent to 6,515.02 and DAX climbed 90.92 points or 1.14 per cent to 8,059.46.
After being hit by a double whammy of worries over slowdown in China and tighter US monetary policy, Asian shares ended in the green on Tuesday tracking a rally in the Wall Street.
Nikkei surged 363.56 points or 2.58 per cent to 14,472.90, Hang Seng climbed 86.01 points or 0.42 per cent to 20,668.20 and S&P/ASX 200 rose 72.12 points or 1.5 per cent to 4,881.65.
US stocks had ended higher on Monday spurred by strong US job data last week and improved US earnings forecast. However, investors remained nervous over Beijing's new drive to reform credit to restructure the economy.
Rahul Bhandawat of Equentis Capital, a UK-based investment analytic and advisory company, said : "Rupee weakness, crude oil prices movement, institutional activity (FIIs) and Q1 results session will direct further trend. CPI, WPI and industrial output growth data is scheduled to release this week and better data may support market. The next major trigger for the markets is Q1 results session as Infosys will kick-start the result session from July 12."
A report from SMC Global said: “Asian stocks rebounded from the biggest slump in the regional benchmark in two weeks, and regional credit risk declined after Alcoa (AA) Inc. started the U.S. earnings season with results that beat analysts’ estimates. US stocks gained for a third session on Monday as Wall Street looked to the second-quarter earnings season.”
According to data released today, Chinese inflation rose more than forecast in June. European Union officials are meeting today after the Euro Zne finance ministers had yesterday agreed on an aid package for Greece.