While the Sensex gained 118 points or 0.34% to 35,260, the Nifty rose 0.38% or 40 points to 10,616 level.

The domestic currency hit an intra day high of 71.86 - a fresh two-month high-in the forex market compared to its previous close of 72.31 to the US dollar.

Oil prices posted the deepest plunge in more than three years in the international market. Brent crude, used to price international oils, dropped to $65.17 a barrel. Oil has now fallen roughly 30 percent for 12 straight days, driven by worries over rising oil production around the world and weakening demand from developing countries, with expectations for increased supply from the US and OPEC.

Other paint stocks too gained in early trade. While Berger Paints gained 5.30% to 325 level, Shalimar Paints rose 2.56% to 88.20. Kansai Nerolac Paints too rallied 4.85% to 421.25 level on the BSE. Crude oil is a key raw material in the production of paints.

Brent crude, used to price international oils, dropped 30 percent to $65.17 a barrel. Oil has now fallen for 12 straight days, driven by worries over rising oil production around the world and weakening demand from developing countries, with expectations for increased supply from the US and OPEC.

Brent crude prices were trading at $68.15 per barrel, down 2.08% from their previous close. Benchmark US crude fell 78 cents to $59.15 per barrel in electronic trading on the New York Mercantile Exchange. The contract sank 26 cents on Monday to $59.93.

Tata Motors (4.84%), Hero MotoCorp (3.82%) and PowerGrid 2.87% were the top Sensex losers. Of 30 Sensex stocks, 25 closed lower.

While the SpiceJet stock fell up to 4.12%, InterGlobe Aviation declined up to 4.43%.  The Jet Airways stock too lost 6.54% on the BSE.

If the data meets forecasts, October will mark the third straight month retail inflation has been below the Reserve Bank of India's medium-term target of 4%, supporting the central bank's surprise decision to hold interest rates at its meeting last month.