The Sensex and the Nifty opened the day sharply higher with the Sensex gaining a huge 240 points in early trade, while the Nifty was up 63 points.
In the last few days there were reports that they if China A Shares were included in the index, it could have sparked some sell-off by foreign portfolio investors in the Indian markets.
Banking shares were the clear winners in trade led by Bank of Baroda, State Bank of India, ICICI Bank and Punjab National Bank.
Shares in Nestle and Sun TV showed strong recovery for the second day in a row on value buying. IT Stocks were also having a good session with TCS, Infosys and HCL Tech among the early winners,
Shares in SPARC were up almost 4 per cent after reports that it had licensed Glaucoma drug to Sun Pharma.
Mid cap stocks were also having a good day with JSW Energy, L&T Finance and Reliance Capital among the movers.
PVR was trading higher after reports that the distributor will acquire DT Cinemas for approximately Rs 500 crore.
Meanwhile, markets in Asia were trading mixed with the Shanghai Composite falling after reports that the China A shares were not included in one of the MSCI key indices.