The S&P BSE Sensex index rose as much as 125.5 points to touch 39,717.58 in early trade and the NSE Nifty benchmark moved to 11,886.75, up 39.2 points from the previous close.
Advances in banking and automobile stocks led the upmove however losses in pharmaceutical shares kept the upside in check. Prime Minister Narendra Modi reached Japan early this morning for the G20 summit on the sidelines of which he will attend several key meetings with world leaders including US President Donald Trump.
At 9:40 am, the Sensex traded 75.43 points - or 0.19 per cent - higher at 39,667.51 while the Nifty was up 25.30 points - or 0.21 per cent - at 11,872.85.
Top percentage gainers on the 50-scrip index at the time were Bharti Infratel, Indiabulls Housing Finance, IndusInd Bank, Bharat Petroleum, Tata Motors and Axis Bank, trading between 1.00 per cent and 1.70 per cent higher.
ICICI Bank, Larsen & Toubro and HDFC contributed the most to the advances in Sensex.
Market breadth supported gains with 950 stocks trading higher on the BSE against 375 struggling with losses. On the NSE, 1,069 stocks advanced while 492 declined.
Mr Trump said on Twitter he looks forward to speaking with PM Modi about a recent increase in India's already high tariffs against the US. "This is unacceptable and the tariffs must be withdrawn," he said.
India had imposed retaliatory tariffs on 28 US items earlier this month, after the Trump administration ended trade concessions for India on June 1.
Equities in other Asian markets turned higher following a media report the US and China have tentatively agreed to a truce in their trade war, ahead of a closely-watched meeting between the two nations this weekend.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent. China led the gains with its blue-chip index up 1.4 per cent. South Korea's KOSPI index was up 0.6 per cent while Hong Kong's Hang Seng and Japan's Nikkei jumped 0.8 per cent.
Overnight in the US, the Dow Jones industrial average and the S&P 500 ended 0.04 per cent and 0.12 per cent respectively, whereas the Nasdaq Composite finished 0.32 per cent higher.
The Sensex and Nifty had each ended 0.40 per cent higher on Wednesday.