Reuters Market Eye - The BSE Sensex gains 0.71 percent, recovering from an early fall, while the Nifty is also up 0.74 percent, marking their highest intraday levels since January 29.
Bank shares gain 1.5 percent adding to Monday's 1.2 percent rise after the finance minister announced a fiscal deficit target of 4.1 percent of the GDP, its lowest since 2007/08, and a gross market borrowing of 5.97 trillion rupees, below market expectations.
HDFC Bank rises 1.9 percent while ICICI Bank gains 1.4 percent.
Shares also get a boost after overseas investors bought Indian stock worth 5.22 billion rupees on Monday.
Also, pharmaceutical shares gain on defensive buying. Ranbaxy Laboratories is up 1.6 percent while Lupin gains 1.7 percent.
(Reporting by Abhishek Vishnoi)