Reuters Market Eye - The BSE Sensex posted on Tuesday its biggest daily gain since June 6, rising for a second straight session, helped by news that Tata Motors Ltd had tripled its quarterly net profit.
The broader NSE index's fall of 3.5 percent since its record high on July 25 until last week was also starting to look overdone, according to some analysts, given continued expectations for an improving domestic economy.
Investors will now keenly await data on India's June industrial production and July consumer prices due after the close of markets for a better indication of the health of the economy.
"The selling pressure has got absorbed and the correction was mostly overdone. I think the overall outlook remains positive, but one should stay stock-specific," said Suresh Parmar, head, institutional equities at KJMC Capital Markets.
The benchmark BSE index rose 1.42 percent to close at 25,880.77, while the NSE index added 1.33 percent to end at 7,727.05.
Among the top gainers, Tata Motors surged 6.2 percent, marking its biggest daily percentage gain since Sept. 10, 2013, when its luxury unit Jaguar Land Rover Ltd (JLR) unveiled a $2.4 billion investment in a new range of cars aimed at the mass market.
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On Monday, Tata Motors said April-June net profit more than tripled on the back of strong sales from JLR.
Others gained on earnings optimism. Sun Pharmaceutical Industries Ltd gained 2.7 percent ahead of its quarterly results later in the day.
Tata Steel closed up 1.4 percent ahead of earnings on Wednesday.
Eicher Motors Ltd gained 8.2 percent after April-June quarter earnings beat analyst estimates.
Also getting a lift were Housing Development Finance Corp, which surged 5 percent, while HDFC Bank Ltd HDBK.NS rose 1.8 percent on speculation the two may see their weightages increase in a rebalancing of global indexes by index provider MSCI, due by mid-month.
Power and infrastructure stocks also gained on short-covering. Tata Power Co Ltd, which fell more than 5 percent in the past four sessions, rose 0.55 percent, while Larsen and Toubro closed 1.8 percent higher and NTPC Ltd NTPC.NS finished up 2.7 percent.
However, Hindustan Petroleum Corp Ltd fell 1 percent after its quarterly net profit lagged estimates.
(Reporting by Indulal PM; Editing by Rafael Nam)