Buying interest in FMCG major ITC also boosted market sentiment.
The 30-share Sensex closed at 16,860, up 154 points and the 50-share Nifty jumped 40 points to provisionally end at 5,104 levels. For the most part of the day, the markets traded on a flat note.
European shares and the euro inched higher on Tuesday but the gains were likely to be limited because investors are worried about Spain's financial problems ahead of two debt auctions.
Spain is expected to pay record high rates for short-term bills later in the day and at a sale of longer-term bonds on Thursday, heightening fears the government will soon need international help. Most of European markets were trading higher.
The CAC 40 index was down by a point at 3,064.
However, DAX and FTSE were trading higher by 0.5 and 0.9% each respectively.
Japan's Nikkei share average retreated on Tuesday from the previous day's four-week high as the initially positive reception for Greece's election result was chilled by concerns about Spain's banking sector.
The Nikkei, Hang Seng, Taiwan and Shanghai ended lower between 0.1-1%.
Back home, Gail (India) was the top gainer among the Sensex stocks, up nearly 3% to close at Rs 336. Index heavyweight Reliance Industries also jumped 2.6% to end at Rs 737. ITC registered its lifetime high levels in trades today. It advanced 2.5% to end at Rs 249.
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