The Nifty ended 1.38% up at 11,662.4, its highest close since Feb. 26, while the Sensex gained 1.54% to close at 39,574.57.
"We're now eyeing the 11,800 zone (for Nifty), so traders should continue with 'buy on dips' in the index while stocks may continue to see the swings on both sides," said Ajit Mishra, vice president of research at Religare Broking.
Housing finance company HDFC Ltd added 8.4% and was the top gainer on the Nifty, saying loan disbursements during the September quarter were at 95% of the level from a year earlier.
Carmaker Tata Motors rose 8.1% after sales at its luxury Jaguar Land Rover unit rose more than 50% sequentially for the September quarter.
The Reserve Bank of India said on Tuesday it would hold its two-day monetary policy committee meeting from Oct. 7 to Oct. 9, having delaye
d it by a week. The central bank is widely expected to keep rates steady. (https://reut.rs/2I2Jcbt)
Late on Monday, the government named three nominees to the central bank's monetary policy committee.
(This story is refiled to correct headline, first and second paragraph to say the Nifty closed at more than "seven-month high", not "one month" high)
(Reporting by Philip George in Bengaluru; Editing by Ramakrishnan M.)