Indian shares snapped five days of falls to gain as Larsen & Toubro surged after positive results, while an improvement in global risk sentiment and the central bank's intervention in currency markets helped provide some stability.
The main BSE index has fallen 4.12 per cent over the previous five sessions as worries about India's economic outlook have intensified following poor industrial output data and concerns about inflation.
The domestic concerns have come during a sharp risk-off trade globally because of the political uncertainty in Greece, though European equities inched up somewhat on Tuesday following better-than-expected economic data.
The Reserve Bank of India also stepped in aggressively in currency markets, after the rupee fell to as low as 54.15 to the dollar during the day, threatening to touch a record low of 54.30 hit in December.
However, these are expected to be temporary reprieves, and analysts say India's benchmark index is liable for more falls after already falling 6.4 per cent this month. "Today's rise was more due to short-covering because of Larsen's decent results and rupee gaining strength due to RBI's effort," said Prakash Diwan, Head of the Institutional Clients Group at Asit C.Mehta Investment.
The country's main 30-share BSE index rose 0.69 per cent to 16,328.25, while the broader 50-share NSE index gained 0.71 per cent to 4,942.80 points.
Also supporting domestic shares was data showing foreign investors extended their net purchases.