The Sensex was trading 288 points higher while the Nifty rallied by 92 points in early trade as Bernanke stated that highly accommodative policy was needed in the US for now.
Among the top gainers in trade were Aluminium major Hindalco, while Jaiprakash Associates, Axis Bank, ICICI Bank and Reliance Infra were among the other Nifty gainers.
IT stocks continued to do well despite gains in the rupee. TCS and HCL Tech gained, while Infosys was up 2 per cent ahead of its results to be declared on Friday.
PSU banks which have been hammered over the last few trading sessions rallied in trade. Notable gainers were Allahabad bank, Bank of Baroda and Union Bank. Andhra Bank, however, dropped after the company's shares were quoted as ex dividend.
The Realty index was up more then 2 per cent in trade. Oberoi Realty, Unitech and Sobha were all closer to 3 per cent gains.
Punj Lloyd rallied more then 2.5 per cent after the infrastructure firm signed a pact with Rwanda to construct and operate 100 MW power plant from peat.
Meanwhile, markets in Asia were trading higher led by strong gains in the Hong Kong's hang Sang and the Chinese Shanghai Composite.