The Sensex ended the day higher by 170 points, while the Nifty rallied 54 points in trade. Among the stocks that led the rally was ICICI Bank, which jumped on hopes that interest rate hopes. Other notable gainers from the banking space were Kotak Mahindra, Axis Bank, HDFC Bank and State Bank of India.
PSU Banking stocks like Indian Overseas Bank, Allahabad Bank and Syndicate Bank also rallied in trade. Auto stocks continued to jump for a second day in a row, after the finance minister announced a cut in excise duties. Maruti Suzuki was up almost 2.5 per cent in trade.
Tata Power which had rallied substantially in trade on Monday after the resignation of Arvind Kejriwal as the Delhi Chief Minister saw profit booking and ended the day lower.
Mid cap stocks also had a good day in line with the index stocks. Among the stocks from the space that gained were Reliance Infra, Voltas and Bata India.
Bharti Airtel, dropped in trade after investors were not happy with the company acquiring Loop. The shares ended lower in a rising market.
Meanwhile, markets in Europe were trading marginally lower. The German DAX, the French CAC and the UK's FTSE were down 10-15 points.