Market benchmark Sensex jumped over 200 points in opening session on Wednesday led by gains in metal, auto, IT and energy stocks amid recovery in global equities.
The 30-share BSE index was trading 214.51 points or 0.52% higher at 41,181.37.
Similarly, the broader NSE rose 71.35 points, or 0.59%, to 12,127.
Tata Steel was the top gainer in the Sensex pack, rising over 2%, followed by Infosys, M&M, Bharti Airtel, Maruti and Hero MotoCorp.
On the other hand, TCS and HDFC slipped in the red.
Besides recovery in global equities, domestic market rose on hopes of an economic revival in the upcoming budget, traders said.
Further, short-covering ahead of January derivatives expiry also lifted key indices, they added.
Bourses in Japan and South Korea were trading with sharp gains, while markets in Hong Kong opened with significant losses after a Lunar New Year break. Bourses in China remained closed.
Benchmarks on Wall Street too ended higher on Tuesday.
Brent crude oil futures rose 1.36 per cent to $59.61 per barrel.
The rupee appreciated 8 paise to 71.22 against the US dollar in morning session.
In the previous session, Sensex settled 188.26 points, or 0.46%, down at 40,966.86, and Nifty closed 63.20 points, or 0.52%, down at 12,055.80.
Meanwhile, on a net basis, foreign institutional investors sold equities worth ₹1,357.56 crore, while domestic institutional investors purchased shares worth ₹711.70 crore on Tuesday, data available with stock exchanges showed.
