At 9:25 am, the Sensex traded 119.70 points - or 0.29 per cent - higher at 41,992.43 while the Nifty was up 28.45 points - or 0.23 per cent - at 12,371.75.

Thirty stocks on the 50-scrip index moved higher at the time. Yes Bank, Sun Pharma, Nestle, Hindustan Unilever and Power Grid - up between 0.82 per cent and 1.26 per cent higher - were the top percentage gainers on the Nifty. (Track Sensex, Nifty Here)

On the other hand, top Nifty laggards were Vedanta, JSW Steel, NTPC, Tata Steel and Hero MotoCorp, trading between 0.76 per cent and 1.21 per cent lower.

HDFC Bank, Reliance Industries and Kotak Bank were the top contributors to the gain in Sensex. Market breadth was highly positive, with 885 stocks on the BSE trading higher against 310 moving lower in early deals.

“Media speculation that long-term capital gains tax will be exempt for two years is further boosting market sentiment,” AK Prabhakar, head of research at IDBI Capital, told NDTV.

Infosys shares declined as much as 0.77 per cent, giving up some of their recent gains registered after the IT major reported its earnings for the October-December period. Last week, the country's second largest IT services company beat Street estimates by reporting a sequential rise of 10.9 per cent in net profit for the quarter ended December 31.

Analysts will closely track earnings announcements by large caps for market direction in the near term. Market heavyweights Reliance Industries and Tata Consultancy Services (TCS) are scheduled to report their financial results on Friday.

Equities in other Asian markets largely remained flat with MSCI's broadest index of Asia Pacific shares outside Japan last seen trading 0.04 per cent higher while Japan's Nikkei 225 was up 0.14 per cent.

Overnight in the US, the stock markets registered new record closing highs on optimism about an end to the US-China trade dispute. The Dow Jones Industrial Average index rose 0.31 per cent to 29,030.22 points, ending above 29,000 for the first time. The S&P 500 gained 0.19 per cent to 3,289.3, its highest close ever.