Hopes of a rate cut by the Reserve Bank Of India in its monetary policy review next week also boosted the market sentiment.
Foreign institutional investors (FIIs) bought shares worth a net Rs 698.23 crore yesterday as per provisional data from the stock exchanges.
The BSE benchmark Sensex resumed higher at 19,466.29 and shot up further to a high of 19,612.18 but declined afterwards to 19,564.78 at 1025 hrs, still showing a gain of 155.09 points, or 0.80 per cent from its last close.
The NSE 50-share Nifty also moved up by 41.10 points, or 0.70 per cent, to 5,950.00 at 1025 hrs.
Major gainers from the Sensex pack were Sun Pharma (3.48 per cent), HUL (2.21 per cent), Jindal Steel (1.98 per cent), Icici Bank (1.96 per cent) and Bajaj Auto (1.88 per cent).
Asian stocks showed a mixed trend in the early trade amid signs of progress in talks over the US fiscal cliff of billions of dollars in upcoming tax hikes and spending cuts in the world's biggest economy.
Key benchmark indices in Hong Kong, Singapore and South Korea rose by between 0.18 per cent to 0.46 per cent while indices in China, Japan, and Taiwan shed by between 0.23 per cent to 0.41 per cent.