Strong foreign fund inflow too buoyed market mood here, traders said.
After hitting a high of 39,306.37 points, the 30-share index pared some gains to trade 52.71 points, or 0.13 per cent, higher at 39,142.74 at 0945 hours, while the broader Nifty advanced 13.40 points, or 0.12 per cent, to 11,613.60.
In the previous session on Monday, the BSE barometer soared 1,075.41 points or 2.8 per cent to 39,090.03, while Nifty zoomed 326 points or 2.89 per cent to end at a two-month high of 11,600.20.
Top gainers in the Sensex pack in early trade included RIL, Infosys, Sun Pharma, TCS, Tata Motors, tech Mahindra, Maruti, Vedanta, ONGC, HCL Tech and M&M, rising up to 3 per cent.
On the other hand, Bajaj Finance, Yes Bank, Asian Paints, Hero MotoCorp, L&T, HDFC Bank, Kotak Bank and Bajaj Auto fell up to 2 per cent.
The government’s big fiscal stimulus has lifted market sentiment as it is expected to revive growth and capex cycle, said Suveer Chainani, CEO - Institutional Clients Group, Emkay Global Financial Services.
The negative impact of higher fiscal deficit should be mitigated as foreign fund flows should help lift balance of payments, he added.
On Monday, foreign portfolio investor purchased shares worth a net of Rs 2,684.05 crore, while domestic institutional investors bought equities worth Rs 291.95 crore, provisional data showed.
Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading on a positive note in their respective late morning sessions.
On Wall Street, stock exchanges ended marginally lower on Monday.
The rupee, meanwhile, appreciated 15 paise against its previous close to 70.79 in early session.
Global oil benchmark Brent crude fell 0.54 per cent to 64.42 per barrel (intra-day).