Benchmark Indices are trading on a higher note led by Auto, Metal and Oil & Gas shares.
Meanwhile, building confidence that the US will reach a budget deal with Congress to avoid fiscal cliff has also buoyed the sentiments.
By 1430, the Sensex gained 91 points at 19,455 and the Nifty advanced 26 points to 5,923.
On the global front, Japan's Nikkei share average jumped 2.4% to end above 10,000 for the first time in more than eight months on Wednesday, on growing expectations of easier monetary policy under a new government.
Signs of progress in negotiations in the United States to avoid spending cuts and tax increases in the so-called "fiscal cliff" also lifted sentiment.
Led by exporters and financials, the Nikkei ended 237.39 points higher at 10,160.40 in heavy volume, ahead of the conclusion of the Bank of Japan's two-day meeting on Thursday.
European markets have opened flat.
Back home, BSE Auto index has surged by almost 2% followed by counters like Metal, Healthcare, Oil & Gas, Realty, IT, TECk and PSU, all gaining by 1% each. However, BSE Capital Goods index has declined by nearly 1%.
From the Auto space, Tata Motors is the top Sensex gainer, up around 3%, extending its past four days gain after the company's UK subsidiary Jaguar Land Rover reported a stronger-than-expected November sales.
Maruti Suzuki, Bajaj Auto and Hero Moto have gained between 1-3%.
Metal shares like Tata Steel, Hindalco, JSPL and Sterlite have surged between 1-2%. Metal shares have extended the gains after a preliminary version of HSBC's China manufacturing purchasing managers' index (PMI) hit a 14-month high in December 2012.
Among Oil & Gas segment, Oil and Natural Gas Corporation has moved higher by over 3% at Rs 265 on back of heavy volumes on reports that US-based ConocoPhillips is in talks with state-run oil exploration firm to pick up stake in more than one of its ultra-deep water blocks.
Index heavyweight RIL has gained over 1%.
IT shares like Wipro and TCS have risen by almost 2%. TCS has gained by nearly 2% after Morgan Stanley upgraded the stock price.
Sun Pharmaceutical Industries is trading higher by 3% at Rs 759, also its record high on the Bombay Stock Exchange.
The stock has rallied over 5% in past two trading sessions after the company said it has entered into a definitive agreement to acquire the generics business of URL Pharma, the US subsidiary of Japanbased Takeda Pharmaceuticals, for an undisclosed amount.
On the losing side, HDFC, ITC, L&T and ICICI Bank have declined between 1-2%.
Among other shares, GTL Infra has locked in lower circuit of 10% at Rs 4.08 for the fifth day in a row after the company's new shares allotted on conversion of foreign currency convertible bonds (FCCBs) got listed on the stock exchanges.
Suzlon Energy and Gujarat Flurochemicals are trading lower by over 2% each after the National Stock Exchange decided to exclude these stocks from the future and options (F&O) segment from March 1.
Meanwhile, BSE Midcap index has gained 0.48% whereas BSE Smallcap index is up 0.4%.
The market breadth in BSE remains healthy with 1,621 shares advancing and 1,231 shares declining.