The Sensex was trading higher by 118 points, while the Nifty gained 34 points in early trade. Among the stocks that gained ground in trade were the banking stocks including the PSU banking names.
ICICI Bank continued to rally for a second day in a row gaining 1.7 per cent, while other notable gainers were Yes Bank and Kotak Bank.
However, HDFC Bank dropped in trade today following a restriction on FII purchases as the trigger limit of 49 per cent had been reached.
Gain in some banking stocks were noted despite worries that the RBI may hike interest rates going forward.
Coal India dropped 1.5 per cent in trade today after the board of directors of the company failed to announce any dividend. The stock was last trading at Rs 282.
Apollo Tyres rallied almost 8 per cent after Cooper Tire lost a court bid to force merger.
PSU banking stocks were having a good day in trade with Canara Bank, Oriental Bank and Union Bank of India among the gainers.
Top Nifty gainers in trade were Jaiprakash Associates, Axis Bank and ICICI Bank.
On the other hand Nifty stocks that lost ground were GAIL, BPCL and Cairn India.
Meanwhile, markets in Asia rallied following strong US data. The Japanese Nikkei, the Hong Kong's Hang Sang and the Korean Kospi were all trading higher.