The BSE Sensex extends gains to 1.92, while the 50-share Nifty adds 1.9 percent, led by broad-based buying in blue-chip shares such as Reliance Industries.
Investors risk appetite bolstered on European Central Bank's bond-buying plan aimed at containing the region's debt crisis. European shares extended Thursday's gains.
Bank shares gained on renewed hopes that the central bank may cut rates on September 17 if the government announces some reform measures next week, dealers say.
ICICI Bank gains 4.5 percent, State Bank of India adds 2.25 percent while Reliance Industries gains 3.4 percent.