Equities gained in the afternoon session on Tuesday and both benchmark indices closed 0.7 per cent higher after reports said that China has confirmed signing phase one of the trade deal with the United States.
The BSE S & P Sensex closed 292 points higher at 38,506 while the Nifty 50 was up 87 points at 11,428.
All sectoral indices at the National Stock Exchange (NSE) except for IT were in the green. Nifty auto closed 2.2 per cent higher, metal by 1.5 per cent and private bank by 1.3 per cent.
Among stocks, Adani Transmission jumped 5.8 per cent intraday after the acquisition of a transmission service provider in Gujarat.
JSW Energy rallied by 5.3 per cent a day after creditors approved the company's resolution plan for Ind-Barath Utkal under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code.
Auto major Eicher Motors surged by 4.7 per cent, Hero MotoCorp by 2.6 per cent, Maruti Suzuki by 2.5 per cent and Mahindra & Mahindra by 2.4 per cent. The other prominent gainers were Vedanta, ONGC, Hindustan Lever and Britannia.
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However, Bharti Airtel, Bharti Infratel, Infosys, Tata Motors and JSW Steel closed in the red.
Meanwhile, most Asian indices were in the green led by the Japanese Nikkei, which rose by 1.8 per cent.
Traders cautioned that sentiment remains fragile as the outcome of Brexit talks later this week is far from certain and the US-China trade war remains a risk to global growth.