The Sensex was trading higher by 402 points, while the Nifty gained 116 points in trade at 9.30 am IST. Among the top gainers in trade were banking stocks which rallied sharply led by 5 per cent gains in Axis Bank. Other banking stocks that rallied were HDFC Bank, IndusInd Bank, Yes Bank, Punjab National Bank and Bank of Baroda.
Joining banking stocks higher were Grasim, Jindal Steel, DLF, Hindalco, Sesa Goa and Tata Steel. Bharti Airtel surged 4% after the Telecom Regulatory Authority cut the reserve spectrum price by 80 per cent.
IndraPrashtha Gas also rallied after the company increased CNG prices in Delhi. Realty stocks were also in the limelight in trade with Indiabulls, Anant Raj and Oberoi Realty all gaining 2-3 pert cent.
Heavyweights, ITC and Reliance also gained in trade adding to strength in the Nifty. The only stocks that lost ground in trade from the Nifty were Dr Reddy's Labs and Bhel which saw selling pressure in early trade.
Software firm Tata Consultancy Services was subdued, though other IT stocks like Infosys continued to see buyers jumping more then 2 per cent.
Meanwhile, the rupee gained more then 100 paise in trade and was last trading at 64.32, gain of 92 paise over Friday's close.
Asian markets were also strong with the Jakarta Composite jumping more then 2 per cent and the Nikkei rallying 1 per cent in trade.