The BSE benchmark Sensex advanced over 150 points in the opening deals supported by gains in banking, power and metal stocks.
The Nifty was above its important psychological level of 8,700 led by buying in heavyweight stocks like ICICI Bank, State Bank of India, Sesa Sterlite and Tata Steel.
Meanwhile, the prospects of higher U.S. interest rates buoyed the dollar but also kept share prices in many countries in check on Thursday, with Asian stocks hovering around seven-week lows.
The dollar's index against a basket of six major U.S. trader partners hit a 12-year high of 99.985 on Wednesday and last stood at 99.689.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 per cent in early Asian trade but still not far from seven-week low hit the previous day.
Japan's Nikkei rose 0.4 per cent, bolstered by hopes of buying from public investors such as the government's pension fund.
Overnight, the U.S. stocks closed lower after trying to recover in a see-saw session a day after the S&P 500's biggest one-day drop in two months, having fallen a similar amount Friday.
The Dow Jones industrial average closed down 27.55 points, or 0.16 per cent, to 17,635.39. The S&P 500 fell 3.92 points, or 0.19 per cent, to 2,040.24 and the Nasdaq Composite lost 9.85 points, or 0.2 per cent, to 4,849.94.
Back home, buying resumed across the board after three days of sell off. Banking stocks were leading the gains on Dalal Street after Finance Ministry said that the banks can raise capital from markets to meet their capital needs. The banking sub index- Bank Nifty advanced over 1 per cent.
Capital goods, metal, power, consumer durables and auto stocks also edged higher in the opening trades.
From the Nifty 50 basket of stocks 44 were advancing. NTPC was the top gainer, the stock surged 4.1 per cent to Rs 160. Ambuja Cement, Sesa Sterlite, Power Grid, Punjab National Bank, Jindal Steel, Bank of Baroda, Bharti Airtel and HDFC were also trading higher by over 1 per cent each.
On the other hand, M&M, Tech Mahindra, Wipro and Bajaj Auto were among the notable losers.
The broader markets were in line with the benchmark indices. The BSE mid-cap and small-cap indices were up around 1 per cent each.
At 9:40 a.m., the Sensex was up 217 points at 28,877 and the Nifty advanced 67 points to 8,767.
(With inputs from Reuters)
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