Benchmark indices opened the day higher, after having surged in trade on Monday, on hopes that there would be interest rate cuts and as tensions along the border eased.
The Sensex was trading with gains of 71 points, while the Nifty rallied 17 points in trade, ahead of the Monetary Policy Announcement by new RBI Governor Urjit Patel at 230 pm.
Asian markets were trading lower, following poor cues from across the US, where markets fell. Worries over the Deutcshe Bank fine also pressurized the global markets in trade.
Banking stocks continued to be in the limelight ahead of the rate cut decision. State Bank of India, ICICI Bank and other PSU Banking stocks like Union Bank of India and Syndicate Bank were all higher in trade.
Shares in Dhampur Sugars saw some buying support after the company said that it would acquire 51 percent stake in DETS at Rs 33 per shares.
Shares in Tata Motors too rallied after the company saw a surge in the volumes. Welspun India shares jumped 4 per cent, after J C Penney said there was no intention of discontinuing relationship with Welspun India.
Meanwhile, the rupee opened at 66.55 to the US dollar.