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Indian shares closed higher on Tuesday as oil prices stabilised around $90 per barrel, while bank stocks were further propped up after analysts said top lender HDFC Bank would see margins improve going ahead.

The NSE Nifty 50 index settled 0.40% higher at 19,811.50, and the S&P BSE Sensex rose 0.39% to 66,428.09.

Financial indexes such as banks, private banks, public sector banks and financials rose between 0.35% and 0.7%, after HDFC Bank reported a net profit in the September quarter in its first results as a single company since the merger with Housing Development Finance Corp (HDFC).

"The pressure on the net interest margins (NIM) for HDFC Bank was expected and it appears that the NIM may have bottomed out," said Saurabh Jain, assistant vice president of research at SMC Global Securities.

The private lender, which has the highest weightage in Nifty 50, led the index gains, adding 0.76%.

"Nifty 50 may consolidate as earnings trickle in, but there are opportunities in financials, infra, auto and property segments" said Samrat Dasgupta, CEO at Esquire Capital Investment Advisors.

"Investors should buy every dip as economic resilience, festive demand and government capex are likely to support equities," added Dasgupta.

Small-caps extended their outperformance over the blue-chips, rising 0.88%. Mid-caps mirrored the benchmarks.

Insurance companies like Life Insurance Corporation of India, HDFC Life Insurance, SBI Life Insurance and Max Financial Services gained over 1.7% each after global brokerage Investec said it expected earnings upgrades following healthy growth in the second quarter.

SBI Life and HDFC Life were among the top Nifty 50 gainers.

Investors await quarterly results of Bajaj Finance after market hours on Tuesday.

Global stocks edged higher, as investors embarked upon the first full week of quarterly earnings while crude prices hovered around $90 per barrel.