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At 1055 hrs, the Sensex was up 162 points at 18,563 and the Nifty gained 39 points to trade at 5,448.
Meanwhile, the rupee fell by 37 paise to 66.86 against the dollar in early trade, after yesterday's strong recovery, at the Interbank Foreign Exchange market on month-end dollar demand from importers amid strengthening of the US currency overseas.
In the broader markets, the smallcap index was up 0.85 and the midcap index gained 0.6% as compared to the 0.9% uptick on the BSE benchmark index.
On the sectoral front, barring Power index which was down 0.8%, all the other sectoral indices weer in the negative.
Bankex, Realty, IT, Teck, Health Care and Consumer Durables indices up 1-1.7% were the major gainers.
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After a brief dip in the negative, the markets edged higher on the first day of September series with all eyes on June quarter GDP data which is expected later in the day.
The gains in TCS, HDFC Bank, HDFC, ONGC and ICICI Bank helped the index edge higher in morning trades.
At 0940, the Sensex was up 37 points at 18,438 and the Nifty was up six points to trade at 5,415. At the same time, the Rupee was quoting at 67.37 against a Dollar.
In the broader markets, the midcap and smallcap indices started marginally higher, with 0.1% gain each.
Meanwhile, Asian stocks rose in early trading and oil prices tumbled as a possible U.S. military strike on Syria appeared less likely.
MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.1%, while Japan's benchmark Nikkei stock average rose 0.9%.
Upbeat Japanese data also cheered investors. Japan's core consumer prices rose 0.7% in July from a year earlier, marking the second straight month of gains and hitting a near-five year high, while the jobless rate stood at its lowest level since October 2008 in July. The availability of jobs hit the highest level in more than five years.
Brent crude prices tumbled 1% to $113.97 a barrel after spiking to a six-month high on Wednesday on fears that any military action in the Middle East, which pumps a third of the world's oil, would disrupt crude supply.
Back home, among the sectoral indices, Power, Capital Goods, and Health Care index started in the negative, down 0.3-1%.
FMCG, PSU and Auto indices were flat with a negative bias.
Realty index up 1% was the top sectoral gainer along with Bankex, Teck, IT, Metal and Consumer Durables indices which added between 0.2-0.7%.
The top losers in the opening deals were Coal India, Maruti Suzuki, Gail India, Tata Power, Sesa Goa, NTPC and Infosys , all down 1-2%.
On the gaining side were Tata Steel, TCS, HDFC Bank, HDFC, Wipro, ONGC and Hero MotoCorp which gained between 0.7-2%.
The market breadth was positive owing to the gains in broader market. 498 stocks advanced while 318 stocks declined on the BSE.
