Uday Kotak, executive vice-chairman and managing director of the Kotak Mahindra Bank, in a tweet said, "As oil collapses deflation worries world. Good for India's macro but makes growth difficult. With Rupee stable time ripe for rate cut cycle."
At day's high, Sensex rose 85 points to 27,670 while Nifty edged above 8,350 levels.
Banking stocks inched up with Bank Nifty rising nearly 0.40 per cent. IndusInd Bank, Axis Bank and SBI were among the gainers.
Brent crude was down 1.6 per cent at $46.68 a barrel after dropping 5 per cent Monday to a near six-year low after Goldman Sachs warned that prices would fall further and as Gulf producers showed no sign of curtailing output.
Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services, said oil marketing companies will benefit from lower oil prices and he prefers BPCL in this space. BPCL shares were up 1.6 per cent today.
Data released after market hours yesterday showed that industrial out rebounded much more quickly than expected in November, posting annual growth of 3.8 per cent year-on-year, the fastest since June.
Retail inflation, meanwhile, rose to 5 per cent in December - below the 5.4 per cent annual rise predicted by analysts in a Reuters poll. Consumer prices were up 4.4 per cent on year in November, their slowest pace since data was first compiled in this way in January 2012.
Tushar Poddar of Goldman Sachs said, "'The weak inflation reading increases our conviction that the RBI will begin easing monetary policy in February with a 25 bps cut in the repo rate."
Some selling pressure was seen shares of energy companies amid margin concerns amid continued pressure in oil prices. ONGC fell 1.7 per cent while Cairn India was down 0.70 per cent and RIL 0.4 per cent.
Infosys fell over 1 per cent after surging in the previous two sessions.
At 11:05 am, the Sensex was down 6 points to 27,579 while Nifty edged up by 15 points to 8,338. (With Agency Inputs)