The Sensex gains 0.5 percent, hitting earlier its highest since March 14, while the Nifty adds 0.5 percent as of 2.30 p.m.
Airline shares extend gains after India's aviation minister says he's hopeful the government will allow foreign direct investment into the sector and has talked to most of the ruling coalition's political allies.
SpiceJet Ltd gains 6.8 percent, Kingfisher Airlines advances 6.3 percent, while Jet Airways gains 4 percent.
Potential airline measures help cement expectations for further government reforms, while Germany's top court's backing of the euro zone bailout fund also helps.
Tata Motors gains 4.6 percent, helped as well by hopes for increased sales for the new Range Rover model to be introduced in October.