Benchmark equity indices Sensex and Nifty ended higher on Tuesday, a day after facing sharp losses, in tandem with a recovery in global markets and easing of hostilities between Israel and Iran.

A rally in bank stocks and cooling oil prices also added to the markets' optimism.

The 30-share BSE Sensex climbed 394.50 points, or 0.54 per cent, to settle at 73,918.76. During the day, it jumped 511.15 points, or 0.69 per cent, to 74,035.41.

The 50-share NSE Nifty ended 119.10 points, or 0.52 per cent, higher at 23,242.10. Intra-day, the benchmark index climbed 156.4 points, or 0.67 per cent, to 23,279.40.

Among the Sensex firms, InterGlobe Aviation, State Bank of India, ICICI Bank, Axis Bank, Bajaj Finance and Asian Paints were the major winners.

Titan, NTPC, Power Grid and Tech Mahindra were among the laggards.

Brent crude, the global oil benchmark, declined 1.66 per cent to USD 92.69 per barrel.

In Asian markets, South Korea's Kospi, Japan's Nikkei 225 and Shanghai's SSE Composite index ended higher, marking a rebound from the sharp losses in the previous trade, while Hong Kong's Hang Seng index settled lower.

The Kospi surged 8.18 per cent, the Nikkei 225 index climbed 2.17 per cent and the SSE Composite index went up by 1.28 per cent.

Markets in Europe were trading in the positive territory.

"Domestic markets are witnessing a mild recovery after the recent sharp decline, supported by a pause in Iran-Israel tensions and softer crude prices. However, sentiment remains fragile, with continued FII outflows and higher bond yields highlighting persistent concerns around evolving global macro dynamics," Vinod Nair, Head of Research, Geojit Investments Limited, said.

US markets ended mostly higher on Monday.

"Indian equity markets ended higher as easing tensions between Israel and Iran helped improve investor sentiment and drive a recovery in risk assets.

"Global markets also traded firmly in positive territory, supported by a combination of easing geopolitical risks, softer oil prices and renewed optimism surrounding the technology and AI sectors," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

Meanwhile, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,555.67 crore on Monday, according to exchange data.

On Monday, the Sensex tumbled 719.08 points, or 0.97 per cent, to close at 73,524.26. The Nifty settled 243.70 points, or 1.04 per cent, lower at 23,123.