At 9:35 am, the Sensex traded 350.13 points - or 0.88 per cent - higher at 39,966.03 while the Nifty was up 99.55 points - or 0.84 per cent - at 11,970.20.

Top gainers on the 50-scrip benchmark index at the time were Yes Bank, Indiabulls Housing Finance, Britannia, Tech Mahindra, Tata Steel and Tata Consultancy Services (TCS), trading between 1.92 per cent and 2.86 per cent higher.

Infosys, TCS and Larsen & Toubro contributed the most to the advances in Sensex.

The Nifty IT index - comprising information technology stocks - soared as much as 1.57 per cent in intraday trade.

Dewan Housing Finance shares spiked as much as 9.46 per cent to touch an intraday high of Rs 91.40 apiece on the Bombay Stock Exchange (BSE), after three days of losses. Till Friday's close, DHFL shares have declined 66.52 per cent so far this year.

Reserve Bank of India Governor Shaktikanta Das has said the central bank would closely monitor the health of non-banking financial companies (NBFCs). The RBI would not hesitate to take corrective measures, if needed, to address issues in the shadow banking sector.

The comment comes at a time when there are fears that the NBFC sector may be facing a major crisis. "We will not hesitate to take any required steps to maintain financial stability in the short-, medium- and long-term," Mr Das said.

Equities in other Asian markets rose amid easing concerns on the US-Mexico trade front, with MSCI's index of Asia-Pacific shares outside Japan rising 0.7 per cent, led by strong gains in Hong Kong and Indonesia, and Tokyo's Nikkei advancing 1.1 per cent.

Global investors had feared that opening up another trade conflict, while still battling with China, could tip the US and other economies into recession.