Markets started the day in the green on the back of supportive cues from Asian markets.At 9:40am, the Sensex was up 98 points at 17,755 and the Nifty gained 22 points to start at 5,385.
In the broader markets, the smallcap index started up 0.6% outperforming the midcap index and Sensex up 0.5% each.
Rupee opened marginally higher in line with gains in euro, local shares may show positive bias, dealers say. The pair is at 55.7150/73 versus 55.75/76 last close.
Overnight, the S&P 500 closed at its highest level since early April on Thursday after comments from German Chancellor Angela Merkel that appeared to support the European Central Bank's efforts to fight the region's debt crisis.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2%, while Japan's Nikkei stock average opened up 0.3%.
Back home, the Nifty is likely to seek support around 5,350 – 5,340, while it can face resistance around 5,375 – 5,385, technical analysts suggest.
Among the sectoral indices, Auto, FMCG, Consumer Durables and IT were the top gainers opening up 0.5-1%.Meanwhile, Metal, Capital Goods and Bankex saw gains between 0.2-0.3%
The top gainers among the Sensex stocks were Tata Motors, Hindustan Unilever, Infosys, Maruti Suzuki,Tata Steel and ITC up 1-2%.
On the losing side were metal names like Sterlite, Hindalco along with L&T, Dr Reddy's, HDFC Bank, Sun Pharma and Wipro down 0.2-1%.
Sterlite Industries and Steel Authority of India were trading lower by over 1% each in opening trades after the National Stock Exchange of India decided to exclude these companies from its benchmark index Nifty 50 with effect from September 28, 2012.
The market breadth was very positive on BSE. 837 stocks advanced while 359 stocks declined.