The Bank Nifty gained 0.61 per cent or 105.45 points to 17,446.05 on Tuesday.
Fitch has said Indian banks' stressed asset ratio will improve marginally to 10.9 per cent in FY16 from 11.1 per cent in FY15.
It said non-performing loan growth will slow down further with cyclical recovery. And, expects a moderate pick-up in loan growth to provide support.
Fitch's view follows Moody's Investors Service's move to revise its outlook on Indian banks to "stable" from "negative".
However, Fitch added that NPL recoveries will be time-consuming.
It said most government-owned banks were at risk of some core capital impairment under the agency's stress test. Indian Overseas Bank (down 0.5 per cent) and Bank of India appeared particularly weak, it added.
Performance of large private banks was significantly superior despite recent asset-quality pressures, the agency said.
PNB gained Rs 2.15 to Rs 131.60; ICICI Bank added Rs 2.45 to Rs 282; Axis Bank was up Rs 4 to Rs 482.25; Canara Bank rose Rs 2.20 to Rs 280.10; Bank of Baroda was up Rs 1.20 at Rs 163.05, SBI was up Rs 1.05 at Rs 238 and HDFC Bank added Rs 6.40 to Rs 1,089.50.
YES Bank was up Rs 1.20 at Rs 773.20, Kotak Bank was up by Rs 2.45 at Rs 688.95.
Of the 12 stocks, only IndusInd Bank was down marginally at Rs 913.20.