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Markets held on to its early gains with the Sensex up 378 points at 21,086 and the Nifty advanced 119 points to trade at 6,279 in the morning deals.
In the broader markets, the mid and smallcap indices added on to its gains, up nearly 1% each.
As a word of caution, retaining stable outlook on India's lowest investment rating, Moody's Investors Service has warned that the economy's grades could be downgraded if the government adopts policies that harm fiscal and growth scenario. Besides, the ratings could also be lowered if forex reserves decline significantly, public sector banks asset quality deteriorates and high inflation persists.
The rupee gained, reaching its strongest level against the dollar in a month as exit polls predicted a strong showing for the key opposition party in state elections.
The rupee jumped to a high of 61.75 against the dollar, its strongest level since November 5. It was last trading at 61.76/77 compared to its 62.05/06 close on Wednesday.
Banking index continues to remain the top gainer with ICICI Bank, HDFC Bank and SBI up 3-6%.
Health Care index down 0.04% was the only index in the negative.
The only scrips in the red among Sensex-30 were Dr Reddys Lab down 0.6%, Sun Pharma and Wipro down 0.2% each.
Among other stocks, Pfizer, Wyeth tumbled 15-21% on turning ex-dividend.
Ceat was down 5% in an otherwise firm market after touching an all time high.
The market breadth continues to remain very positive. 1175 stocks advanced while 545 stocks declined on the BSE.
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(Updated at 1030 hrs)
Markets had a gap up opening with the benchmark indices opening 2% higher on the back of exit polls showing the Bharatiya Janata Party (BJP) having an edge over the Congress in the five Assembly elections held in November and December.
In opening trades, the Sensex was up 424 points at 21,133 and the Nifty gained 128 points to trade at 6,289.
In the broader markets, the midcap index was up 1% and the smallcap index gained 0.7%, both underperforming the Sensex which shot up 2%.
In Asia, markets are lower today as Chinese and Hong Kong shares fall. The Shanghai Composite is off 0.16% while the Hang Seng is down 0.37%. The Nikkei 225 is not trading.
US Stocks remained mixed on Wednesday as market participants tried to make sense of better-than expected economic reports and gauge the mindset of the Federal Reserve.
The Dow Jones Industrial Average and the S&P 500 indices ended marginally lower, while the Nasdaq managed to churn moderate gains. The Dow and S&P 500 have fallen for the past four days.
Dow Jones industrial average was off 0.16 percent, to close at 15,890 levels while the S&P's 500 Index was down 0.13 percent, to finish at 1,793. But the Nasdaq Composite Index inched up0.02 percent, to close at 4,038.
Back home, all the sectoral indices were in the green with gains of atleast 0.3% in the opening trades. The ones leading gains were Bankex, Capital Goods and Realty indices up 2-4%.
Oil & Gas, Power, PSU, Auto, Consumer Durables, FMCG and Metal indices were up 1-1.5%.
Teck, IT and Health Care indices added 0.3-0.6%.
All the Sensex-30 stocks were in the green with banks like ICICI bank and HDFC Bank leading gains up 6% and 4% respectively.
L&T, HDFC, BHEL, Maruti Suzuki, SBI, RIL, Hindalco, Bajaj Auto, Bharti Airtel, Tata Motors and Jindal Steel were the other notable gainers, up 1.5-4%.
The market breadth was very positive. 858 stocks advanced while 177 stocks declined on the BSE.
