The BSE Sensex rose more than 1.5 percent early on Friday, with investors upbeat on higher Asian markets and ahead of an interim railway budget that could cut some freight rates.
Top-listed Reliance Industries and lender ICICI Bank were the main gainers.
By 9:57 a.m., the 30-share BSE index was up 1.55 percent at 9,612.66 points, with 29 components rising after starting up 0.8 percent.
The 50-share NSE index was up 1.44 percent at 2,934.60.
Shares in Bajaj Hindusthan, Shree Renuka Sugars, State Trading Corp and Rei Agro, Ruchi Soya will also be watched in anticipation of lower freight costs.
Investors will also be upbeat on firmer Asian markets and a Wall Street rebound on Thursday.
V.K Sharma, head of research at Anagram Stock Broking, said he expected the main BSE index to open 60-70 points higher.
There will be position building ahead of Monday's mini general budget, which is widely expected to unveil a stimulus plan to revive growth he said.
The index fell 1.6 percent on Thursday to 9,465.83 points after data showed an unexpected fall in industrial output added to economic worries.
Asian markets were trading higher after investor concerns eased on news of a U.S. government programme to subsidise mortgage payments for troubled homeowners.
At 0328 GMT, Japan's Nikkei was up 1.5 percent, while the MSCI Index of Asia-Pacific shares outside Japan gained 1.7 percent.
Nifty futures in Singapore were trading up 1 percent, indicating a positive opening in the local market.
STOCKS TO WATCH
* State-run Indian Oil Corp, after it forecast revenue losses on fuel sales for the current fiscal year at 590 billion rupees ($12.1 billion).
* Pantaloon Retail (India) Ltd, after its founder pledged 19.49 percent of equity.
* Oil & Natural Gas Corp, after it said it may offer a 15-20 percent stake in its planned petrochemical project in western India to GAIL (India) Ltd.
