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 India's benchmark Nifty 50 index is set to open higher on Tuesday, in sync with a rebound in Asian peers, following a drop in the previous session.

India's GIFT Nifty was trading at 21,704.50 as of 8:09 a.m. IST, suggesting the NSE Nifty 50 will open above its close of 21,513.00 on Monday.

The MSCI's broadest index of Asia-Pacific shares outside Japan gained about 0.5%, after shedding 0.85% on Monday.

Wall Street equities closed higher overnight, while U.S. Treasury yields fell ahead of a key inflation reading due on Thursday. [MKTS/GLOB]

Besides U.S. inflation data, corporate earnings and domestic macroeconomic data will influence the trajectory of domestic equities in the near-term, analysts said.

The Nifty fell 0.91% on Monday, dragged by financials and consumer stocks on concerns over their earnings.

"We expect a further rise in volatility in domestic markets," said Morgan Stanley analysts led by Ridham Desai.

While valuations appear to be stretched, earnings growth momentum, flexible inflation targetting made India one of the top picks in emerging markets, the brokerage added.

Foreign institutional investors net bought shares worth 160.30 million rupees ($1.9 million) on Monday, while domestic investors purchased a net 1.56 billion rupees of shares, according to exchange data.

Monthly FPI buying in Indian equities hit a record in December, while India's mutual fund assets topped a record 50 trillion rupees in the month.

STOCKS TO WATCH:

** Eicher Motors: Auto maker's unit Royal Enfield signed pact to invest 30 billion rupees in Tamil Nadu for automobile component manufacturing.

** Tata Motors: Subsidiary Jaguar Land Rover posted 27% year-on-year growth in sales in December quarter.

** Bajaj Auto: Company approved proposal to buyback shares not exceeding 40 billion rupees at a price of 10,000 rupees per share.

** BEML: Company bagged order worth about 3.3 billion rupees from Ministry of Defence.

($1 = 83.0560 Indian rupees)