The BSE Sensex closed higher on Monday as stocks of blue-chip companies recovered from recent losses, tracking positive cues from European markets, while technology shares rose for a second consecutive day.
Improving China trade data also helped sentiment as it eased some of the recent concerns about the global economy.
Investors will keenly watch the Indian consumer inflation data due later the in day, after data showed India's industrial output expanded at a much slower-than-expected pace in August.
Quarterly results of large corporates, especially India's largest conglomerate Reliance Industries Ltd <RELI.NS>, will set the trend in the short-term, according to analysts.
"The overall outlook is positive. There are buyers at every lower level. However, people are in a wait and watch mode. Corporate earnings would be the next key event to watch out for," said Suresh Parmar, head of institutional equities at KJMC Capital Markets.
The benchmark Sensex closed 0.33% higher at 26,384.07, while the broader Nifty ended up 0.31% at 7,884.25.
Technology stocks were among the lead gainers, with Infosys rising 1.4%, adding to its 6.6% gain in the last session, after the company's stellar earnings led to renewed buying interest in India's software exporters.
BSE's IT index gained 1.2%. Tata Consultancy Services closed up 1.4%.
Heavyweight banks gained, with State Bank of India ending 1.4% higher after falling 1.1% in the previous session, and ICICI Bank closing up 1.3%.
Among other gainers, Coal India Ltd rose 1.7% on value-buying after falling 11.3% in the September quarter and after HSBC upgraded the stock to "overweight" from "neutral".
Indusind Bank Ltd shares closed 1.9% higher after the company reported earnings that beat some analysts' estimates.
Shares of Future Retail Ltd closed 1.5% higher and Future Lifestyle Fashions Ltd gained 1.9% after the Future Group said it formed a strategic partnership with Amazon India by which the retailer will sell its merchandise exclusively online.
Reliance Industries declined 0.3% ahead of its quarterly results.
Among other decliners, pharmaceutical stocks fell with Sun Pharmaceutical Industries closing 2.1% lower as investors churned portfolios. Sun Pharma had gained 2.3% in the last two sessions.
Cipla Ltd ended 2.8% lower and Dr Reddy's Laboratories closed down 1.9%.