Sensex is expected to climb on BSE early on Wednesday, with State Bank of India and state-run fuel retailer Indian Oil Corp in focus ahead of their quarterly earnings.
"The single largest domestic factor is that earnings so far have not really disappointed the investor," said Kishor Ostwal, chairman at CNI Research.
"The slowdown and effects of successive interest rate hikes should have seen steep slide in earnings. That has not happened," he said.
State Bank, the country's largest lender, is expected to report a 2.9% drop in September quarter net profit, a Reuters poll of brokerages done nearly a month ago showed.
However, on Tuesday, the stock had rallied 1.6% on market talk the bank's provisioning may not be as large as feared.
Explorer Oil and Natural Gas Corp had beat market expectations on Friday with a 60% jump in quarterly profit, helped by higher fuel prices and lower subsidy burden.
Globally, investor sentiment was boosted after Italian Prime Minister Silvio Berlusconi said he would resign, raising hopes the debt-ridden country would proceed with reforms to contain the euro zone's sovereign debt crisis from spreading.
The MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.25% by 0253 GMT, while the Nifty stock futures traded in Singapore were up 0.5%.