Advances in metal, banks and energy counters supported the markets however weakness in auto and IT stocks limited the upside.

At 9:38 am, the Sensex traded 97.17 points - or 0.25 per cent - higher at 38,993.88, while the Nifty was up 16.05 points - or 0.14 per cent - at 11,604.40.

Top percentage gainers on the 50-scrip index at the time were Tata Motors, Vedanta, ONGC, Tata Steel and Cipla, trading between 1.16 per cent and 1.86 per cent higher. On the other hand, IndiaBulls Housing Finance, TCS, UPL, Mahindra & Mahindra - trading between 1.07 per cent and 2.01 per cent - lower were the top laggards.

While ICICI Bank, HDFC Bank and Reliance Industries contributed the most to the advances in Sensex, TCS, Mahindra & Mahindra and HDFC were the top drags.

Market breadth was largely neutral, with 678 stocks on the BSE trading higher against 669 struggling with losses. On the NSE, 764 stocks advanced while an equal number of shares declined.

The Sensex and Nifty had closed 0.41 per cent and 0.31 per cent higher respectively on Monday.

Official data showed on Monday that wholesale inflation - gauged by the Wholesale Price Index (WPI) - hit a 23-month low of 2.02 per cent in June, helped by a decline in the prices of vegetable, fuel and power. However, consumer inflation picked up to an eight-month high of 3.18 per cent last month, according to separate data released last week.

Equities in other Asian markets inched up on Tuesday, with MSCI's broadest index of Asia-Pacific shares outside Japan trading 0.04 per cent higher. Australian shares were up 0.1 per cent and Japan's Nikkei stock index dipped 0.36 per cent.

Investors were relieved by encouraging Chinese economic data on the previous day, though broad pressure across global business and investment from Sino-U.S. trade frictions and slowing world growth reinforced expectations of policy easing by major central banks.