High global crude prices are a concern for India, which imports more than two-thirds of the oil it consumes. Last week, the central bank raised key interest rates for the eighth time in 12 months, and warned of inflation pressures and emerging risks to growth.
"The macro picture is far from being comforting. Concerns over inflation, interest rates and oil prices still persist and the upside is really capped," Gajendra Nagpal, CEO of Unicon Financial, said.
Energy major Reliance Industries, which has the heaviest weight in the main index, led the gains, rising 1.1 percent after falling 5.4 percent over the past three days. ??? State-run Coal India, the world's biggest coal miner, rallied 3.9 percent after DNA newspaper reported the company may report a 12 percent rise in profit after tax for the fiscal year ending March 31.
The 30-share BSE index rose 0.84 percent or 149.25 points to 17,988.30, with 25 components closing in the green.
"The market is showing a recovery mostly on short covering. There has been no fresh buying. The outlook is sceptical on uncertain crude prices. Crude prices will be the main trigger in the near term," Deven Choksey, managing director and CEO of KR Choksey Shares said.
Foreign funds have pulled out around $1.9 billion from Indian equities since the start of the year, and the benchmark is down 13 percent in 2011, making it one of the worst performing major markets in 2011.
Brent eased by as much as 0.5 percent on Tuesday to stay below $115, but it was still high for comfort.
State-run oil marketing companies, which sell fuel at government-set low prices, fell. Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp dropped between 0.3 percent and 0.5 percent.
Auto shares rose after Maruti Suzuki Chairman R.C. Bhargava said in a television interview that he does not see a long-term disruption for auto parts due to the Japan situation. Maruti Suzuki, Tata Motors and Mahindra and Mahindra rose between 1.2 and 3.6 percent.
Gainers outnumbered losers in the ratio 1.2:1 on volume of about 264.5 million shares, lower than the 30-day average volume of 277 million.
The 50-share NSE index closed up 0.92 percent at 5,413.85 points.
The MSCI's measure of Asian markets other than Japan was up 0.77 percent, while Japan's Nikkei rose 4.36 percent.
STOCKS THAT MOVED
Ballarpur Industries rose more than 5 percent after its unit BILT Paper Plc said it plans to raise $330 million from a London listing.
Arshiya International rose 1.6 percent on newspaper reports the company is planning to set up a trade warehousing zone at Mundra Port, two dealers said.
Sugar producers rallied after industry sources told Reuters the government was likely to allow 200,000 tonnes of sugar exports on Tuesday under unrestricted sales, less than half a million tonnes permitted earlier.
Shree Renuka Sugars, Bajaj Hindusthan , Simbhaoli Sugars and Balrampur Chini Mills rose between 1.7 percent and 3.07 percent.