Breakthroughs in developments for a vaccine had driven markets across the world sharply higher in November, with India's main stock indexes too climbing over 11% each on the back of record inflows from foreign institutional investors.
The domestic market extended gains on Tuesday after data released late Friday showed India's economy contracted by 7.5% in the September quarter, versus an 8.8% contraction expected in a Reuters poll, amid signs of a pick-up in manufacturing.
The Nifty 50 index closed up 1.08% at 13,109.05, while the benchmark Sensex climbed 1.15% to 44,655.44. Indian markets were closed on Monday for a holiday.
Investors looked past a survey released earlier in the day showing India's manufacturing recovery faltered in November as virus fears weighed on demand and output.
In Mumbai, heavyweight IT firm Infosys Ltd was the biggest boost to the indexes, rising 3.4%. Large private-sector lender ICICI Bank Ltd jumped 2.5%.
The Nifty Auto Index ended 1.1% higher after a handful of automakers reported monthly sales figures. Bajaj Auto Ltd advanced 2.2% after reporting a near 5% rise in sales for November.
The Nifty PSU Banking Index, which tracks state-run lenders, was among the best performers, closing 2.9% higher at its best level since late August.
India's most valuable company Reliance Industries Ltd rose 1.3%.
European peers also made a positive start to the month following a record-breaking November and U.S. futures were higher after a drop on Monday, while MSCI's broadest index of Asia-Pacific shares outside Japan climbed after robust China data.
(Reporting by Chris Thomas in Bengaluru; Editing by Shailesh Kuber)