Shares climbed to a five-month high on Tuesday, lifted by sharp gains in Bajaj Finserv and HDFC Life Insurance, as investors looked past faster-than-expected inflation print.
The NSE Nifty 50 index was up 0.53% at 18,031.55, as of 0346 GMT, while the S&P BSE Sensex rose 0.51% to 60,424.12.
Bajaj Finserv, a holding company for financial services businesses, surged 6.3% ahead of the record date for a stock split and bonus issue of shares.
HDFC Life Insurance Company jumped 4.7% to its highest since June 9. Reuters reported on Tuesday that British asset manager abrdn plc would sell a stake in HDFC Life through a block trade on Tuesday.
Meanwhile, data released after market hours on Monday showed India's inflation accelerate to 7% in August, piling more pressure on the central bank to hike interest rates again later this month.
Investors are also eyeing U.S. inflation data that will offer cues for interest rate outlook.