The Allan Border Medallist missed last week's 10-wicket first Test win by Australia in Wellington because of a thigh strain.
But the opener batted without any discomfort in the nets and is confident he can also get through several spells of medium-pace bowling through the match.
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"Initially it was a cork that set it off in the fourth (one-day international) game playing a pull shot, it came off the back of my hip," Watson told reporters at Seddon Park on Friday.
"Throughout the fifth one-dayer it got a bit tight and then going to training it sort of tweaked a little bit leading into the first Test.
"It has all settled down really, really well so I'm right to go full steam."
Kiwis gamble on long tail
Watson's return means opener Phillip Hughes (20 and 86 not out) is likely to drop out of the side, after the 21-year-old was recalled a week ago when Watson withdrew because of injury.
Meanwhile New Zealand captain Daniel Vettori says 19-year-old batsman Kane Williamson is unlikely to make his Test debut on Saturday, as the Kiwis prepare to gamble on a long tail against Australia's quicks.
Jeetan Patel is set to be recalled as the team's second spinner behind Vettori, replacing injured paceman Daryl Tuffey. Mathew Sinclair is vying for the No.3 batting spot in place of the
out-of-form Peter Ingram.
"I think we'll go in with Jeetan. We'll refine the squad down to having Kane in the mix of 12 but in the end it's looking like (we're) going in with the five bowlers and me still batting at six," Vettori said.
Pace bowler Tim Southee is expected to retain his spot against competition from all-rounder James Franklin.
The Kiwis lost five for nine in their first innings of the first Test.
Vettori will on Saturday become only the second New Zealand player to reach the 100-Test milestone, behind former skipper Stephen Fleming (111 matches from 1994-2008).
