The S&P BSE Sensex index rose as much as 217.76 points to 38,774.80 in early trade and the NSE Nifty benchmark moved to 11,561.70, up 62.8 points from the previous close.
Advances in metal, pharma and energy stocks supported the markets in morning deals. Corporate earnings from large cap companies and macroeconomic data will be watched closely, say analysts.
At 10:40 am, the Sensex traded 177 points or 0.46 per cent higher at 38,734 while the Nifty was up 56 points or 0.49 per cent at 11,555.
Top percentage gainers in the 50-scrip Nifty index were JSW Steel, Vedanta, Dr Reddy's Labs, Zee Entertainment, Tata Steel and Hindalco, up between 1.86 per cent and 3.18 per cent.
Market breadth favoured gains, with 898 stocks on the Bombay Stock Exchange (BSE) trading higher and 546 struggling with losses. On the NSE, 958 stocks advanced while 576 declined.
Reliance Industries, HDFC Bank, HDFC and State Bank of India (SBI) contributed the most to the upmove in the Sensex.
The government is due to release data on consumer inflation and industrial production on Friday.
The Reserve Bank of India (RBI) tracks CPI or Consumer Price Index based inflation data primarily while formulating its monetary policy.
IT major Infosys will report its earnings for the quarter ended June 30 on Friday. Earlier this week, TCS, the country's largest IT services exporter, reported a net profit of R. 8,131 crore for the June quarter.
InterGlobe Aviation, promoter of India's largest airline IndiGo, shares fell for second straight session after one of its co-founder Rakesh Gangwal alleged corporate governance issues at the company and approached market regulator Sebi to intervene in the matter. IndiGo shares fell as much as 8.93 per cent to Rs. 1,273 on top of yesterday's 19 per cent decline.
Fourteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Telecom Index's 0.9 per cent gain. Auto, Healthcare, FMCG, Energy, Utilities, Metal, Oil & Gas, Power and Realty sector gauges also rose between 0.5 and 0.9 per cent each.
On the flipside, S&P BSE Consumer Durables Index was top loser, down 0.9 per cent.
A higher surcharge on the super-rich announced in the budget spooked non-resident and overseas funds in the four-day period, erasing Rs. 2.9 lakh crore in market value from Sensex companies.