The Sensex jumped over 250 points in early trade on Friday, driven by gains in banking and financial stocks ahead of the Reserve Bank's bi-monthly policy review.
The 30-share index was trading 258.60 points or 0.68 percent, higher at 38,365.47. Similarly, the broader NSE Nifty spurted 70.00 points, or 0.62 percent, to 11,384.00.
Nine out of the 11 sectoral indices on the National Stock Exchange (NSE) traded higher, led by the banking and financial services spaces, ANI said.
Top Sensex gainers in early session include Yes Bank, IndusInd Bank, SBI, Vedanta, HDFC, Hero MotoCorp, Tata Steel, and HDFC Bank, rising up to 5.52 percent.
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Losers in the pack were Tata Motors, M&M, Bharti Airtel, HCL Tech, PowerGrid, L&T, and ICICI Bank, falling up to 1.18 percent. In the previous session on Thursday, the BSE barometer ended 198.54 points, or 0.52 percent, lower at 38,106.87, while the Nifty fell 46.80 points, or 0.41 percent, to close at 11,313.10, a PTI report said. The Reserve Bank of India (RBI) is scheduled to announce the fourth bi-monthly monetary policy for 2019-20 on Friday, after a three-day meeting.
It is likely to go for yet another rate cut, the fifth in a row, as inflation is within the comfort zone and the need to boost the economy is pressing.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 810.72 crore on Thursday, exchange data showed.
The rupee, meanwhile, strengthened by 5 paise against its previous close to trade at 70.82 in early session.
Asian stocks edge higher
Elsewhere in Asia, bourses in Hong Kong, Korea and Japan were trading on a weak note, as investors await US jobs data scheduled to be released later in the day, after a series of weak figures this week, which triggered concerns over the global economy.
Asian stocks edged higher on Friday, thanks to gains on Wall Street, but the mood was cautious before a key US job report that could help determine whether the Federal Reserve cuts interest rates further, Reuters said.
Investors have been caught out by a set of weak U.S. data this week, including surveys on services and manufacturing sectors, deepening fears the Sino-U.S. trade war is starting to hurt growth in the world's biggest economy.
"We'll probably see a bounce in Asian shares, but then nervousness will creep into the markets as the day progresses," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent. Japan's Nikkei stock index lost 0.17 percent, but Australian shares edged 0.05 percent higher.
US stock futures ESc1 fell 0.15 percent in Asia on Friday, though that followed a 0.80 percent increase in the S&P 500 on Wall Street overnight on hopes that future Fed rate cuts will support corporate profits.
"The bounce on Wall Street is not a definitive sign. It's actually pessimistic for stocks that two-year yields are falling this much. It shows the bond market hasn't gotten on board with this positive growth story," AMP's Oliver said.
That sentiment was underscored by a frail performance for world stocks in recent weeks, hurt by political uncertainty in the United Stated and Hong Kong, geopolitical tensions in the Middle East, Brexit and a drumroll of weak global data.
In Asia, excluding Japan, equities were on course for the third weekly decline, their worst performance since four weeks of declines ended 16 August.
Japan's Nikkei was down 2.6 percent for the week, on course for its biggest weekly decline since 2 August pressured by worries about trade friction and a resurgent yen.
Hong Kong shares were down 0.13 percent and though they are on track for a 0.65 percent weekly gain, sentiment is fragile as the territory's government mulls emergency laws to contain months of often violent protest against China's rule of the former British colony.
Chinese markets are closed for the holiday week.
However, US markets on Thursday ended higher on rate cut expectations.
Brent futures, the global oil benchmark, rose 0.36 percent to $57.92 per barrel.
Rupee up by 9 paise
Meanwhile, the Indian rupee appreciated by 9 paise to 70.78 against the US dollar in early trade on Friday ahead of the Reserve Bank of India's monetary policy decision.
Forex traders said, the domestic unit was trading higher as investors believe the RBI will go for yet another rate cut to boost slowing economic growth.
At the interbank foreign exchange the rupee opened at 70.82, then gained further ground and touched a high of 70.78, registering a rise of 9 paise over its previous close.
--With agency inputs