At 2:28 pm, the Sensex traded 381 points - or 1 per cent - higher at 38,596 while the Nifty was up 110 points - or 0.97 per cent - at 11,451.

The Nifty Auto index - comprising shares in manufacturers of cars, motorcycles, heavy vehicles, auto ancillaries and tyres - jumped as much as 2.09 per cent. Prominent gainers in the sector included Eicher Motors, Maruti Suzuki and Hero MotoCorp, which rose as much as 4.75 per cent, 2.90 per cent and 3.40 per cent respectively.

HDFC Bank, ITC, Kotak Bank and HUL were the top contributors to the gain in Sensex.

Consumer goods stocks rose a day after Hindustan Unilever reported its earnings for the second quarter of the current financial year, beating Street estimates. HUL shares jumped as much as 2.74 per cent to Rs 2,070.00 apiece on the BSE.

Analysts awaited more large cap companies to report their quarterly earnings for cues.

IT major Wipro was due to report its results for the quarter ended September 30 later in the day. Wipro shares fell as much as 1.71 per cent to Rs 239.20 apiece on the BSE.

Analysts believe there is further room for the RBI to ease the monetary policy going forward.

"With growth numbers remaining fairly weak we expect RBI to continue with its rate cuts," news agency Reuters quoted Shubhada Rao, chief economist at Yes Bank, as saying in a report. "For remaining FY20, we expect 25-40 bps of rate cut."