The 30-share index was trading 205.47 points, or 0.54 per cent, higher at 38,438.88. It had ended 424.50 points, or 1.12 per cent, higher in the previous session. The broader Nifty also rose 53.45 points, or 0.47 per cent, to 11,536.70 in morning trade.

Top gainers include IndusInd Bank, SBI, Sun Pharma, Bharti Airtel, L&T, Bajaj Finance, Axis Bank and Tata Motors, rising up to 3.62 per cent.

While, ONGC, NTPC, PowerGrid, Hero MotoCorp, Coal India, ICICI Bank and RIL were among the top laggards, shedding up to 1.10 per cent. Sector-wise, BSE Capital Goods index was the biggest gainer, rising 0.70 per cent, followed by BSE Bankex, finance, FMCG, healthcare and auto indices gaining up to 0.54 per cent.

"Indian markets have been the recipient of robust foreign flows this entire March on the back of increased likelihood of strong political stability and policy continuity post elections and the softer stance adopted by global central banks," said Devang Mehta, Head – Equity Advisory, Centrum Wealth Management.

Foreign portfolio investors (FPIs) bought shares worth a net of Rs 999.02 crore on Tuesday, while domestic institutional investors (DIIs) sold shares worth Rs 196.70 crore, provisional data showed.

In the Asian region, Hong Kong's Hang Seng was up 0.49 per cent, Korea's Kospi was trading marginally higher, Shanghai Composite Index gained 0.55 per cent; while Japan's Nikkei fell 0.61 per cent. On Wall Street, the US Dow Jones Industrial Average ended 0.55 per cent higher on Tuesday.

The rupee, meanwhile, depreciated 5 paise against its previous close to 68.91 against the US dollar in early session.