The Sensex gained 284 points, while the Nifty rallied 82 points in trade. Among the early gainers were banking stocks led by ICICI Bank, which gained 2 per cent, while other banking stocks that rallied in trade were Axis Bank, Bank of India, Yes Bank and HDFC Bank.
PSU banking stocks were also having a good day in trade with notable gainers being Union Bank, Syndicate Bank and Allahabad Bank.
Software stocks were also in demand with gainers from the space being Infosys, Wipro, Tata Consultancy Services and HCL Tech.
There were only two losers from the Nifty and they were Dr Reddy's Labs and Coal India.
Cox & Kings rallied almost 4 per cent in trade after its net profits grew sharply. Tata Steel also gained on better then expected Q2 performance.
Mid Cap stocks were having a good session with IFCI and Reliance Capital rallying almost 3 per cent each, while other notable gainers from the space were most of the PSU banks.
Meanwhile, markets across Asia staged a sharp rally led by the Hong Kong's Hang Sang and the Chinese Shanghai Composite. The latter was up more then 2 per cent in trade.
Markets in Europe are also expected to open strong even as the Dow Jones is a whisker away from a new historic peak of 16,000 points.