The Sensex and the Nifty rallied in trade with the Sensex ending 128 points, while the Nifty rallied 37 points in trade.
Leading the set of gainers from the Nifty was Sun Pharma which rallied a huge 5 per cent in trade, while other notable winners were Tata Power, Gail, ICICI Bank and BPCL.
Hindustan Unilever, which on Monday reported numbers that lagged estimates ended the day lower by one per cent.
Jindal Steel which ended the day sharply lower on Monday continued to lose ground. The stock ended the day lower by 1 per cent. DLF on the other hand recovered marginally after having fallen sharply on Monday.
Select mid cap stocks ended the day higher with notable winners being JSW Energy and Oracle. Energy stocks had a good day with IOC and Gail among the winners.
Meanwhile, markets across Europe were trading sharply higher led by gains in the German DAX, French CAC and the UK's FTSE.