The benchmark equity indices gained over one per cent in the morning trading session on Friday as global rating major Moody's upgraded India's rating after 14 years.
At 10.30 a.m., the 30-share Sensex was trading up 364.20 points or 1.10% at 33,471.02. The broader Nifty was also up 113.30 points or 1.11% at 10,328.05.
The market breadth was strong with 1,701 stocks gaining ground as against only 508 declines. Most of the sectoral indices were also trading in the green.
The United States-based agency upgraded India's sovereign credit rating by a notch to 'Baa2' with a stable outlook. It upgraded the country's rating to 'Baa3' in 2004, while in 2015, only the rating outlook was changed to 'positive' from 'stable'.
"The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term," Moody's said in a statement.
High debt burden
It, however, cautioned that high debt burden remains a constraint on India's credit profile.
"Moody's upgrade comes as a welcome move in the wake of slew of structural reforms in the economy that are expected to enhance the potential growth in the medium term," said Upasna Bhardwaj, senior economist, Kotak Mahindra Bank.
"In the near term, however, given that debt limits are nearly utilised there remains minimal room for a rally in gsec. Further, inflows in equity markets will also increase domestic liquidity," he said.