A rally in technology stocks drove up shares more than 1% on Monday, with the market also benefiting from an improvement in the global mood after China eased its COVID-19 curbs.
The Nifty was up 1.61% at around 16,615 in early trade, while Sensex rose 1.64% to around 55,790. Both the indices added more than 1% on Friday.
All the major sub-indices advanced on Monday, with Nifty IT leading the pack with a 3.6% rise. HCL Technologies and Infosys jumped more than 3% and were the top gainers on Nifty.
The market is set for a near-term rally and the beaten down IT segment is likely to stage a good comeback, assisted by short-covering, said V K Vijayakumar, chief investment strategist at Geojit Financial Services, in a note.
Stocks in India's $194-billion IT sector have taken a beating in recent months from growing investor worries about inflation, supply chain issues and the impact of the Ukraine war on client spending.
The sentiment on Monday was also underpinned by news that Shanghai will cancel many conditions for businesses to resume work from Wednesday, which along with hopes of an eventual slowdown in US monetary tightening, sent MSCI's broadest index of Asia-Pacific shares outside Japan up 1.2%.
Among the top movers, automaker Mahindra and Mahindra rose 3.6% to a near four-year high after it reported a jump in quarterly profit over the weekend.
Tata Motors gained 2.3% after the automaker said it could acquire Ford India's plant in Gujarat.
Realty stocks advanced 3.5% to a one-week high.
Electronic components maker 3M India soared 18.9% on the back of strong March-quarter numbers.
Among the few decliners, JSW Steel fell 4.2% after it logged a fall in quarterly profit.