Tata Motors led the Sensex higher Tuesday. Image: Tata Motors.

The Indian stock market has generally performed well over the past several years, largely defying the weakness that other emerging markets have faced as it consolidates its economic advances and looks for ways to expand its growth opportunities around the world. More recently, the decision from the Reserve Bank of India to cut interest rates more than expected has given investors new hope that the nation's pro-business policies can continue, and the stock markets in India have responded positively. On Tuesday, the BSE Sensex (NYSEINDEX: ^BSESN) pressed ahead with a gain of 147 points to finish at 26,933, up almost 5% in just a week. As foreign investors start to look at the nation's stocks as an emerging-market safe haven, India will need to figure out whether it can keep reversing a profit slump earlier this year and give new shareholders the returns they want to see.

How Indian stocks fared today
Gains in the Indian stock market were fairly broad-based. Tata Motors (NYSE:TTM), which produces cars under the Jaguar and Land Rover names as well as its own vehicles, gained nearly 6%, leading the 30 stocks in the Sensex and building further on an already impressive gain on Monday. Natural-resources stocks also had solid gains, with companies in the oil, natural gas, and even coal industries seeing substantial gains.

Yet the rise wasn't limited to industrial and materials stocks. Several names in the healthcare and financial industry were higher, with Dr. Reddy's Labs climbing by 1.5% on the day. Technology stocks were relatively weak, though, with major Indian IT consultant firms posting slight losses.

Short-term traders were pleased about the five-day rally, which marked the longest streak of gains in several months. Yet even with the latest rise, the Sensex remains down slightly on the year, and although it has avoided the carnage that its peers in China and Brazil have suffered, Indian investors are still hungry to get back onto a winning track in terms of longer-run returns.

As the world's second most populous nation, India has huge long-term opportunities for growth-seeking investors, and the country's status as part of the former British Commonwealth gives it some advantages in overcoming language barriers and strengthening already existing ties with other major economies around the world. Long-term investors will have to wait to see whether India can stay on the right course, but its efforts so far are encouraging, and its relative performance in a tough market should build confidence in India's ability to reach the long-range goals it sets for itself.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.