The S&P BSE Sensex index rose 254.46 points to touch 41,075.76 at the strongest level recorded in early trade, and the broader NSE Nifty benchmark moved to as high as 12,108.00, up 70.3 points from the previous close.
Sharp gains in automobile stocks - followed by banking and information technology shares - pushed the markets higher. Analysts awaited the release of official GDP data due by the end of the week for cues.
The markets hovered near record highs, with the Sensex coming within 50 points and the Nifty within 25 points of their all-time highs recorded the previous day.
At 9:23 am, the Sensex traded 244.26 points - or 0.60 per cent - higher at 41,065.56, while the Nifty was up 61.30 points (0.51 per cent) at 12,099.00.
Top percentage gainers on the 50-scrip index at the time were Yes Bank, Tata Motors, Mahindra & Mahindra, HDFC and Eicher Motors, trading between 1.70 per cent and 5.70 per cent higher.
On the other hand, top laggards on the Nifty 50 index were Cipla, Bharti Infratel, Bharat Petroleum, Bharti Airtel and Dr Reddy's, down between 0.42 per cent and 2.55 per cent.
HDFC, Tata Consultancy Services (TCS) and HDFC Bank were the top contributors to the gain in Sensex.
Market breadth favoured gains with an advance-decline ratio of almost 2:1. On the NSE, 1,004 stocks traded higher whereas 567 moved lower in the first few minutes of trade. On the BSE, 832 stocks advanced while 514 declined.
The government is due to release data on gross domestic product (GDP) for the quarter ended September 30 on Friday evening.
Equities in other Asian markets ticked higher as more upbeat signals from US-China trade talks fanned hopes of an imminent end to tariff hostilities, which helped offset concerns about a slowing US economy.
The positive mood pushed Wall Street indices to fresh record closing highs on Tuesday and stoked confidence in early Asian trade with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.14 per cent. Japan's Nikkei rose 0.41 per cent.
On Tuesday, the Sensex had ended 67.93 points (0.17 per cent) lower at 40,821.30 and the Nifty settled down 36.05 points - or 0.30 per cent - at 12,037.70 as the benchmark indices reversed direction after touching all-time highs.