Leading the set of gainers from the Sensex were stocks like ONGC which rallied on reports that a four-member committee of secretaries set up by the government to review the gas-pricing formula will hold its first meeting with stakeholders.
Other Nifty gainers in trade were Bhel, Maruti Suzuki, Hindalco, Dr Reddy's Labs and Jindal Steel. Stocks like Infosys and United Spirits dropped in early trade.
PSU banking stocks which recovered partially towards the end of last week on buying support continued to rally in trade. Stocks like Canara Bank, Oriental Bank, Indian Overseas Bank and Punjab national bank saw buying interest.
The broad markets were also trading higher with mid cap stocks continuing to show some traction. CESC, AB Nouvo, UPL and Apollo tyres were among the early gainers in trade.
Realty stocks continued to be subdued for a second day in a row. Stocks like Sobha Developers, HDIL and Unitech were weak in eraly trade.
Meanwhile, markets in Asia continued to trade steady, despite a less dovish tone by Fed Chair, Janet Yellen, raising the prospects of an earlier than expected hike in interest rates in the US.