At 9:57 am, the Sensex traded 308.15 points - or 0.81 per cent - higher at 38,155.80 while the Nifty was up 85.80 points - or 0.76 per cent - at 11,357.10.

Top percentage gainers on the 50-scrip index at the time were Bharti Infratel, Cipla, IndusInd Bank, UltraTech Cement, Dr Reddy's, Sun Pharma and HDFC, trading between 1.39 per cent and 4.51 per cent higher.

Gains in HDFC Bank, HDFC, Infosys and ICICI Bank contributed the most to the advances in Sensex.

Market breadth favoured gains, with 1,007 stocks trading higher on the BSE and 541 struggling with losses. On the National Stock Exchange (NSE), 992 stocks advanced while 576 declined.

Analysts say that after five days of losses, the markets look poised to rise in the short term.

"The worst appears to be over for the markets. There has been reasonable correction in past two months," AK Prabhakar, head of research at IDBI Capital, told NDTV.

The Sensex and Nifty had closed 0.36 per cent and 0.53 per cent lower respectively on Wednesday, extending their decline to a fifth session in a row after the International Monetary Fund cut its 2019 and 2020 growth forecasts for India.

"After 19 months of correction, there is an upside potential in mid- and small-cap stocks," he said.

The S&P BSE Midcap and Smallcap indexes rose as much as 0.86 per cent and 0.55 per cent respectively in early deals on Thursday. At Thursday's closing levels, the indexes are down 11.20 per cent and 11.31 per cent respectively so far this year.