The recent healthy trend in the market is the outperformance of fundamentally strong large caps compared to mid and small caps. This trend is keeping the market healthy and hence, it is likely to continue. If the rally continues, largecap banking stocks are likely to be the leaders, he said.

US CPI data to be published today (Wednesday) is important as it will determine the quantum of rate cuts by the Fed this year. He said the fact that UK inflation has declined by two-thirds is significant and positive from a market perspective, but the trajectory of inflation going forward will largely influence the direction of stock markets globally.

Deepak Jasani, head of retail research at HDFC Securities, said Asian shares traded cautiously ahead of key inflation data, which will influence the framework for the Federal Reserve's next steps. U.S. stock indexes closed nearly flat on Tuesday under pressure from financial sector stocks as investors awaited inflation trends and as major banks prepared to start earnings-reporting season later this week.

BSE Sensex is trading 218 points higher at 74,901 points. Tech Mahindra, Bharat Airtel and Kotak Mahindra Bank are up more than 1 per cent.