Mumbai: The BSE benchmark Sensex on Tuesday rose by 198 points in early trade on sustained buying by funds and retail investors, buoyed by easing inflation and a firming trend on other Asian boures.

The 30-share BSE index, which gained almost 152 points in the previous two sessions, rallied further by 198.14 points, or 1.22 percent, to 16,387.50, with all sectoral indices, led by auto and capital goods, trading in the positive zone.

The wide-based National Stock Exchange Nifty Index moved up by 61.30 points to 4,935.20 points.

Brokers said continued buying by participants triggered by easing inflation which fell to a two-year low of 7.47 percent in December and reports of a firming trend on the other Asian boures following China's faster-than-expected growth in the fourth quarter, supported the upside in stock prices.

In the Asian region, Hong Kong's Hang Seng Index rose by 0.93 percent and Japan's Nikkei Index by 0.63 percent in morning trade on Tuesday.

The US markets were closed on Monday.