The BSE benchmark, the Sensex was trading 0.88% or 213.97 points higher at 24,588.37 points, while the NSE's Nifty was trading 0.88% or 63.95 points higher at 7,340.35 points at 10.30 am IST.
Experts believe expectations of an improvement in the economy is driving markets. "Markets seem to be factoring in return to fiscal prudence and Improved investment climate," Axis Capital said in a report.
Among sectoral indices, the BSE Power (2.47%), BSE Capital Goods (2.08%) and BSE Realty (1.35%) were the major gainers. Among individual stocks, Bharti Airtel (4.12%), Bhel (3.24%) and Sesa Sterlite (3.04%) were the major gainers on the 30-share Sensex.
Most Asian indices were trading in the green. The Nikkei (1.04%), Straits Times (0.20%), Taiwan Taiex (0.30%), Jakarta Composite (0.09%) and Shanghai Composite (0.02%) were trading higher.
Indian shares gain; power stocks lead
(Reuters) India's BSE Sensex index is up 0.7 percent, while the broader NSE Nifty index is 0.5 percent higher.
Power stocks gain on hopes Narendra Modi, India's incoming prime minister, would focus on removing bottlenecks in the sector, dealers say.
NTPC Ltd gains 2.1 percent, while Tata Power is up 2.5 percent.
ITC edges up 0.7 percent and State Bank of India is up 0.5 percent, ahead of respective Jan-March earnings later in the day.
Reliance Communications surges 3.6 percent after the Financial Times reported that the Indian company was in talks with China's Citic Telecom over an undersea cable joint venture, citing unnamed people familiar with the talks.
Coal India Ltd gains 1.2 percent, adding to Thursday's 5.1 percent surge, after Reuters reported that prime minister-designate Narendra Modi was exploring an overhaul of the state behemoth, a step that an investor said would unlock more value in the firm.