Indian shares gained for a second straight session on Tuesday as gains in Asian markets and expectations of an interest rate cut by the central bank aided sentiment.
Asian stocks posted their biggest rise in two weeks, with MSCI's broadest index of Asia-Pacific shares outside Japan breaking two days of falls to gain 0.8 percent.
Back home, the Reserve Bank of India is expected to cut interest rates at its monetary policy meeting after Prime Minister Narendra Modi's currency crackdown rattled the economy, according to a Reuters poll.
The RBI's recently formed Monetary Policy Committee is forecast to cut the repo rate by 25 basis points to 6.00 percent when it concludes its two-day meeting on Dec. 7, according to the poll of nearly 60 economists this week.
"After yesterday's short covering, there is some consolidation now," said Anand James, chief market strategist at Geojit BNP Paribas Financial Services.
Markets are supported by an expectation that there will be populist measures to ease the demonetisation pain, James said, adding that a 25 basis points cut in rates is largely expected.
Modi's outlawing of high-value bank notes last month, aimed at curbing corruption and tax evasion, has left the nation's 1.2 billion population scrambling to exchange old notes for new and left many companies' cash-reliant supply chains in tatters.
The move has also raised concerns of a sharp slowdown in the economic growth of the fastest growing major country in the world.
The broader NSE Nifty was up 0.50 percent at 8,169.55 by 0540 GMT, while the benchmark BSE Sensex was 0.49 percent higher at 26,476.31.
Among the gainers, Tata Power Co Ltd <TTPW.NS> rose as much as 3.6 percent to hit its highest in nearly a month after the company's strategic engineering division received a defence order worth more than 2 billion rupees ($29.4 million).
The Nifty IT index rose 1.13 percent, after falling 2.5 percent in the last three sessions. Infosys Ltd <INFY.NS> and Tata Consultancy Services Ltd <TCS.NS> were among the biggest gainers on the index.
Consumer stocks ITC Ltd <ITC.NS> and Hindustan Unilever Ltd <HLL.NS> fell about one percent each, after gaining more than 1.5 percent on Tuesday.