Sensex rose over 150 points while the broader Nifty edged towards its important psychological level of 8,300 led by gains in auto, capital goods and metal shares.
The broader NSE index is up 0.61 per cent so far this year, but has moved in a narrow range as investors wait to see how earnings shape up in the latest quarter, given fears about the economic impact from government's move to ditch higher-value notes.
Sentiment was also subdued ahead of budget, scheduled on Feb. 1, and caution ahead of key global events such as Donald Trump's swearing-in as U.S. president later this month.
"Markets are consolidating like they have been in the past couple of weeks and are in a very narrow range as they wait for the quarterly results and for Donald Trump to take over as president of the U.S," said Dipen Shah, senior vice president, public client group research, Kotak Securities.
The Sensex ended 173 points higher at 26,900 and Nifty advanced 53 points to shut shop at 8,289.
Tata Motors was among the top Nifty gainers, the stock ended 3.55 per cent higher at Rs 518 after as JLR said on Monday sales rose 20 per cent to a record last year.
Hindalco, Adani Ports, Tata Steel, HDFC Bank, Hero MotoCorp, Reliance Industries, Sun Pharma and Asian Paints were also among the gainers.
Among other gainers, Max Ventures and Industries jumped as much as 17.5 per cent to Rs 79.40, its highest since July 8. The company said it will sell 22.5 per cent stake to unit of New York Life Insurance Co for Rs 121 crore.
Private sector lender IndusInd Bank began third quarter earnings season. The bank's net profit rose 29 per cent to Rs 750.64 crore , beating analysts' estimates.
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