The Sensex was trading higher by 124 points, while the Nifty gained 33 points in early trade. Among the early gainers in trade were ONGC, HDFC, HDFC Bank and Tata Consultancy Services.
Nifty losers were Bharti Airtel, Coal India, Jindal Steel and NMDC.
Mid Cap shares continued to have a good run in trade with notable gainers being Siemens, India Cements and Crompton Greaves.
Shares in Mahindra and Mahindra were trading marginally higher after the company reported good tractor sales.
Steel stocks were trading weak after Chinese PMI data disappointed. Shares in Jindal Steel were trading lower, while Tata Steel was flat in early trade.
PSU banking stocks saw a sharp rally in trade with notable gainers from the space being Canara Bank, Syndicate Bank, Oriental Bank and Punjab National Bank.
Private sector banks like ICICI Bank and IndusInd Bank also saw some buying interest.
Meanwhile, markets across Asia were trading weak, following poor data from China. The Seoul Composite was down more then 1 per cent, while the Shanghai Composite was down 0.50 per cent.