The BSE Sensex was trading 0.5 per cent higher on Tuesday, with software outsourcing firms leading the gains, as Asian markets bounced back from early losses and as the revival of monsoon boosted sentiment.
Software majors rose on expectations of good volume growth at its June quarter results, to be unveiled later this month.
"We expect the big three to report strong 5.1 per cent to 6.5 per cent surge in volumes quarter-on-quarter," brokerage Edelweiss said in a note, referring to Tata Consultancy Services, Infosys Technologies and Wipro.
By 11:10 am, the 30-share BSE Index was trading up 0.52 per cent at 17,532.65 points, with 25 of its components gaining.
A revival of June-September monsoon rains, the main source of water for India's summer-sown crops, also boosted sentiment.
Monsoon rains advanced into its key grain-producing states of Punjab and Haryana, narrowing the shortfall since June 1 to 13 per cent from 16 per cent earlier.
"Recovery in rainfall is a key positive. Monsoon and June quarter earnings will be closely watched for further cues," said Neeraj Dewan, director of Quantum Securities.
Edelweiss expects June-quarter earnings growth for Sensex to come at 6.1 per cent on a year-on-year basis.
Foreign funds have poured in $6.8 billion so far this year after pumping in a record $17.5 billion in 2009, which had fuelled a rally of 81 per cent.
Top IT firm TCS was up 1.9 per cent while rivals Infosys and Wipro rose 0.9 per cent and 1.4 per cent respectively.
Energy giant Reliance Industries, which has the highest weight on the main index, climbed 0.5 per cent to 1,073.60 rupees.
Lenders shrugged off a hawkish interest-rate outlook and advanced on hopes that a strong economic growth would boost demand for loans.
A Reuters poll forecast the central bank is likely to raise interest rates again in its quarterly review on July 27, topping up its last Friday's quarter-point rate hike.
Top lender State Bank of India was up 0.8 percent while leading private-sector rivals ICICI Bank and HDFC Bank climbed 0.7 per cent and 0.6 per cent respectively.
In the broader market, gainers led losers in a ratio of 1.7:1 in a volume of 147 million shares.
The 50-share NSE index was up 0.5 per cent at 5,263.90 points.