Sensex gained 103 points on signs of revival in the manufacturing sector.
The benchmark index opened on a positive note at 25,470 against the previous close of 25,414. It made a high of 25,572 and low of 25,467 before closing at 25,516.
Turnover on BSE was higher at Rs 3,747 crore against Rs 3,551 crore recorded on Monday.
In NSE, Nifty was up 23 points at 7,635.
Metal and mining stocks on BSE gained substantially after the latest data showed China's manufacturing expanded in June at the fastest pace this year. Aditya Birla group company Hindalco Industries gained seven per cent to Rs 175 after foreign brokerages raised the stock's rating. Bharti Infratel scaled new high after a foreign brokerage maintained 'outperform' rating on the stock. ABB India, Bajaj Finserv and Bajaj Holdings and Investment hit 52-week high.
Tata Steel gained three per cent to Rs 541 as the company announced restructuring proposals to improve the competitiveness of its South Wales steelmaking business. The proposed changes would enable the UK Strip Products business to compete in Europe's lower market demand era by reducing costs equivalent to the loss of about 400 jobs in Port Talbot, it said.
Maruti Suzuki India jumped six per cent to Rs 2,585 after the company said during market hours that its total sales rose 33 per cent to 1.12 lakh units in June 2014. The stock hit record high of Rs 2.603.25 in intraday trade.
Major gainers were Bajaj Holdings (9%), Gujarat State Petroleum (9%), Hindalco Inds (7%), Maruti Suzuki (6%), Motherson Sumi (6%), Prestige Estates (6%) and Dish TV India (6%).
Prominent losers were CESC (-3%), CRISIL (-3%), Union Bank (-2%) and Allahabad Bank (-2%).