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Strong third-quarter corporate earnings lifted Indian stocks ahead of the federal budget due next week, while a technology stocks-led rally on Wall Street helped broader sentiment.

The Nifty 50 index was up 0.23% at 18,159.10 as of 10:40 a.m. IST on Tuesday, while the S&P BSE Sensex rose 0.27% to 61,104.88.

Most major sectoral indexes jumped, with high weightage financials and information technology rising 0.25% and 1% respectively, after banks managed to contain bad loans and improve recoveries, while IT companies said they bagged more deals despite a softness in Europe.

"Financials will single-handedly lead corporate earnings in this quarter, on credit growth and improving asset quality" said Siddhartha Khemka, head of research (retail) at Motilal Oswal Financial Services.

The Nifty 50 would continue to trade in a 450-point range between 17,800 and 18,250 ahead of the union budget, due to high valuations, he added.

Auto stocks advanced 0.4% ahead of quarterly earnings by top carmaker Maruti Suzuki and TVS Motor, scheduled to report later in the day.

Two analysts expected car makers to post strong sales in the December quarter, helped by a pandemic-free festive season.

They also said that a rise in the technology-linked NASDAQ Composite index(up 8.6% in 2023 so far), strong earnings from most domestic IT firms and easing global recession concerns had resulted in gains in domestic I.T. firms.

Investors were waiting for details from the union budget due next week. Euro zone and U.S. flash PMI data coming later in the day were expected to show less severe economic contractions in December than in the previous month.

Heavyweight private lender Axis Bank Ltd fell over 1.7% despite posting a stronger-than-expected jump in third-quarter profit on Monday. The stock had logged gains in each of the last five sessions ahead of its results, adding 2.14%.

Meanwhile, Wall Street equities extended gains for a second straight session on Monday, after technology stocks surged on easing fears of a recession.

($1 = 81.4830 Indian rupees)