Benchmark indices rebounded in early trade on Tuesday, after a sharp decline in the previous trade, amid buying in IT stocks and recovery in Japanese markets.
The BSE Sensex climbed 348.1 points to 84,647.88 in early trade. The NSE Nifty went up by 96.75 points to 25,907.60.
From the 30 Sensex firms, Tech Mahindra, Larsen & Toubro, State Bank of India, Bajaj Finserv, Infosys and Power Grid were the major gainers.
Asian Paints, JSW Steel, Tata Steel and Titan were among the laggards.
In Asian markets, Tokyo traded higher. South Korea, Hong Kong and mainland Chinese markets are closed for a public holiday on Tuesday. Mainland China will be closed for the rest of the week due to holiday.
The US markets ended in the positive territory on Monday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 9,791.93 crore on Monday, while Domestic Institutional Investors (DIIs) bought equities worth Rs 6,645.80 crore, according to exchange data.
"FII selling is likely to be absorbed by DII buying and, therefore, it is unlikely to do serious long-term damage to the market," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The unusual volatility in stock markets is reflected in the 8 per cent spike in Shanghai Composite index and the 4.8 per cent crash in Nikkei index yesterday, Vijayakumar said.
"This extreme volatility is likely to stabilise soon," he added.
Global oil benchmark Brent crude declined 0.29 per cent to USD 71.77 barrel.
The BSE benchmark tumbled 1,272.07 points or 1.49 per cent to settle at 84,299.78 on Monday. During the day, it plunged 1,314.71 points or 1.53 per cent to 84,257.14.
The Nifty tanked 368.10 points or 1.41 per cent to 25,810.85.
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