US-China trade war is likely to be on the investors' radar on Tuesday. US President Donald Trump said on Monday he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks with Chinese President Xi Jinping at the G20 summit.
Additionally, oil prices, movement of rupee against the US dollar and FII flows will also play a key role.
On Monday, the S&P BSE Sensex rose 169 points, or 0.43 per cent, to 39,785 while the broader Nifty50 index added 52 points, or 0.44 per cent, to settle at 11,923.
The rupee closed 19 paise lower at 69.65 against the US dollar on Monday.
Asian stocks made modest gains on Tuesday. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.2 per cent. South Korea’s KOSPI added 0.15 per cent and Japan’s Nikkei edged up 0.05 per cent.
On Wall Street, indices ended higher after weak US jobs data bolstered hopes of a rate cut from the Federal Reserve.
During the overnight trade on Monday, the Dow Jones Industrial Average added 79 points to end at 26,063 while the S&P500 gained 13 points to close at 2,887. The Nasdaq too ended 81 points higher at 7,823.
In the commodities market, oil prices stabilised on Tuesday on expectations that producer group OPEC and allies will withhold supply to prevent prices from tumbling.