BSE Sensex and Nifty extend gains, up 1.5 percent each. Unwinding of short positions in index futures helps.
NSE index December futures' outstanding positions down by 354,400 shares - NSE data.
Foreign investors had sold index futures worth 10.51 billion rupees ($166.24 mln) in last two sessions - NSE and NSDL data.
Both indexes head towards snapping their five-day losing streak and recording their biggest daily gain since October.
Optimism prevails after cabinet clears nationwide sales tax bill, rally in Asian shares.
($1 = 63.2200 rupees)
(Reporting by Abhishek Vishnoi)
