At 2:16 pm, the Sensex traded 292.38 points - or 0.75 per cent - higher at 39,405.12, while the Nifty was up 79.20 points - or 0.68 per cent - at 11,770.65.

Top gainers on the 50-scrip index at the time were Yes Bank, Indiabulls Housing Finance, Sun Pharma, IndusInd Bank, ICICI Bank, JSW Steel and Cipla, trading between 1.44 per cent and 9.45 per cent higher.

ICICI Bank, Reliance Industries and HDFC contributed the most to the advances in Sensex.

HDFC shares rose as much as 1.31 per cent in intraday trade, a day after the mortgage lender said it would buy a 51.2 per cent stake in Apollo Hospital Group's joint venture, Apollo Munich Health Insurance Company, for Rs. 1,347 crore.

The Nifty IT index - a sectoral index on the NSE comprising IT shares - gained some ground after falling as much as 1.77 per cent during the session.

The US has told India it is considering caps on H-1B work visas for nations that force foreign companies to store data locally, news agency Reuters reported citing three sources with knowledge of the matter, widening the two countries' row over tariffs and trade.

The MSCI ACWI, which incorporates readings of 49 equity markets across the world, gained 0.3 per cent on Thursday, after the Federal Reserve signalled possible interest rate cuts later this year. The benchmark index has recovered a large part of its 6.7 per cent losses made after US President Donald Trump threatened new tariffs on all of China's imports last month. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent while Japan's Nikkei gained 0.6 per cent.

The Federal Reserve on Wednesday signalled interest rate cuts beginning as early as July, saying it is ready to battle growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation.

Overnight on Wall Street, the S&P 500 gained 0.3 per cent to 2,926, just 19 points off its record closing high hit on April 30.