At 2:20 pm, the Sensex traded 1.02 per cent or 395 points higher at 39,068.20 and the NSE Nifty 50 Index advanced 0.86 per cent or 100 points to 11,724.

Foreign institutional investors have been buying shares in Indian equity markets. In the month of March, foreign portfolio investors bought shares worth Rs 33,980.56 crore, according to data from the NSDL.

The S&P BSE Sensex and NSE Nifty 50 indexes logged in smart gains in financial year 2018-19, which concluded on Friday. The Sensex jumped 5,704 points or 17 per cent and the NSE Nifty 50 Index added 1,510 points to clock a return of 15 per cent in FY18-19.

"Indian markets played a catch up with the global peers after 4-5 months of underperformance as global liquidity found its way to emerging markets and India was a beneficiary of that after global central banks turned accommodative and dovish," Ajay Bagga, executive chairman at OPC Asset Solutions, told NDTV.

Investor confidence got a boost on brightening prospects of Prime Minister Narendra Modi and his ruling Bharatiya Janata Party returning to power.

Sixteen of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Metal Index's 2.3 per cent gain. Capital Goods, Auto, Industrials, Basic Materials, Information Technology and Banking Indexes on the BSE also advanced between 0.6 and 2 per cent each.

On the flipside, S&P BSE Energy Index was top loser, down 0.3 per cent.

Mid- and small-cap shares were also witnessing buying interest as the S&P BSE MidCap Index rose 0.66 per cent and the S&P BSE SmallCap Index advanced 0.88 per cent.

From the Nifty 50 basket of shares, 34 were advancing while 15 were declining. Hindalco was top gainer in the Nifty 50 basket of shares, up 5.47 per cent at Rs 216.75. Tata Motors, Cedanta, UltraTech Cement, GAIL, Tata Steel, Larsen & Toubro, Mahindra & Mahindra and ICICI Bank were also among the gainers, up between 1.7 and 4.8 per cent each.