The 30 share index was trading 119.27 points, or 0.33 per cent, higher at 36,212.74 at 0930 hours, while the broader Nifty rose 23.90 points, or 0.22 per cent, to 10,728.70.
Top gainers in the Sensex pack in early trade included Yes Bank, HDFC Bank, Maruti, Hero MotoCorp, Kotak Bank, HUL, M&M, Bajaj Auto and IndusInd Bank, rising up to 2.22 per cent.
On the other hand, NTPC, PowerGrid, ONGC, Axis Bank, SBI, Tata Motors, Asian Paints, ITC and HCL Tech fell up to 2.46 per cent.
According to experts, rate cut hopes and a slew of measures taken by the government to boost the ailing economy has boosted investor sentiment here.
After four successive rate cuts this year, Reserve Bank governor Shaktikanta Das Thursday said “there is more room” to do so given the growth deceleration and stable inflation that is likely to stay below target for a year or so.
Further, in a bid to boost lending, the government on Thursday asked public sector banks to hold loan melas in 400 districts to lend to desirable shadow banks and retail borrowers, and said no stressed loan account of MSMEs will be declared an NPA till March 2020.
Finance Minister Nirmala Sitharaman, who has since her maiden Budget on July 5 announced measures in three tranches for boosting the economy, held a meeting with heads of public sector banks (PSBs) on Thursday to review liquidity or money flow in the system and transmission of lower benchmark interest rates to borrowers.
Market is now awaiting cues from the GST Council which is scheduled to meet later in the day to decide on tax moderation, keeping in mind the revenue position and the need to boost sagging economic growth.
On the global front, resumption of trade talks between the US and China also buoyed market mood, traders said.
Bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading on a positive note in their respective late morning sessions.
On Wall Street too, bourses too ended on a positive note on Thursday.
The rupee, meanwhile, appreciated 21 paise against its previous close at 71.12 in early session.
Global oil benchmark Brent crude rose 0.33 per cent to 64.61 per barrel (intra-day).
On Thursday, foreign portfolio investor sold shares worth a net of Rs 892.52 crore, while domestic institutional investors bought equities worth Rs 645.72 crore, provisional data showed.