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Indian shares edged higher on Tuesday, aided by an uptick in metal stocks, after China announced it will further ease its strict COVID-19 restrictions, bolstering expectations of demand recovery in the world's second-largest economy.

The Nifty 50 index was up 0.10% at 18,032.10, as of 11:40 a.m. IST, and the S&P BSE Sensex rose 0.07% to 60,597.35.

Both the indexes had risen more than 0.6% earlier in the session, with a pullback in banking stocks prompting the indexes to pare the gains.

Metals led the gains, jumping over 2.7% after top consumer China announced it will stop requiring inbound travellers to go into quarantine starting from Jan. 8, moving further away from a strict "zero-COVID" policy that had disrupted its economic activity.

China's COVID-19 management will also be downgraded to the less strict Category B from the stringent Category A, the country's health authority said on Monday.

The announcement buoyed other Asian markets as well, with the MSCI Asia ex-Japan index rising 0.53%. [MKTS/GLOB]

Domestic infrastructure spending, improved balance sheets of metal companies and hopes of demand revival in China have powered metal stocks, said Anita Gandhi, director at Arihant Capital Markets.

Meanwhile, the banking index swung between 0.68% gains and 0.55% losses during the session. Analysts said that the volatility in the sector was a "bout of profit-taking after the recent sharp rally."

Analysts expect the sentiment to remain positive on the financials sector in the long term.

Thirty-six of the Nifty 50 constituents logged gains, with JSW Steel, Hindalco Industries , Tata Steel, Tata Motors rising over 2.5%.

Among individual stocks, Time Technoplast jumped over 10% on repeat order from Adani Total Gas, while Laurus Labs fell to a 20-month low after a fatal fire at its Visakhapatnam plant.