The Sensex was trading higher by 137 points, while the Nifty gained 41 points in early trade. Among the stocks that saw maximum traction in early trade were Bhel, Jaiprakash Associates, Punjab National Bank and Hindalco.
The Bank Nifty rallied almost one per cent with stocks like Axis Bank, Bank of Baroda, Bank of India, Canara Bank, HDFC Bank and ICICI Bank all gaining in early trade.
IT stocks too gained despite a strong rupee with TCS, Wipro and Infosys amongst the early gainers. The star performers, however, were the metals pack with Hindalco, Jindal Saw, Jindal Steel, Nalco, Sesa Goa and Sterlite Industries bouncing sharply.
Auto stocks too rallied in line with broad market sentiments with Mahindra and Mahindra and Maruti Suzuki amongst the gainers. Hero MotorCorp was up more than one per cent after the country's largest two-wheeler maker reported a marginal increase in its sales at 5,41,615 units in December 2012.
Mining major NMDC was up after reports that the state-owned iron ore miner is engaged in active discussions to acquire coking coal assets in Russia and Mozambique to feed its upcoming steel-making plant in Chhattisgarh.
PSU Banking stocks continued to trend higher on hopes that the RBI would cut interest rates later this month. None of the 50 components from the Nifty were trading in the red.
Meanwhile, markets in Asia were all trading higher with the Hong Kong's Hang Sang up almost 2 per cent, while the Korean Kospi and the Singapore's Strait Times was up more than one per cent.