Equity benchmark Sensex jumped over 200 points in early trade on Friday tracking gains in index majors HDFC Bank, L&T and ICICI Bank ahead of the Reserve Bank of India's monetary policy outcome. The 30-share BSE index was trading 202.71 points or 0.45 per cent higher at 44,835.36.
Similarly, the broader NSE Nifty was trading 66.10 points or 0.50 per cent up at 13,200.
UltraTech Cement was the top gainer in the Sensex pack, rising around 4 per cent, followed by L&T, M&M, Maruti, ONGC, Bharti Airtel, PowerGrid and ITC.
On the other hand, Asian Paints, Infosys, Reliance Industries and Tech Mahindra were among the laggards.
In the previous session, Sensex ended 14.61 points or 0.03 per cent higher at 44,632.65, while Nifty settled 20.15 points or 0.15 per cent up at 13,133.90 -- its lifetime closing high.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,637.42 crore on a net basis on Thursday, according to provisional exchange data.
Domestic equities continue to look resilient and firm. A continued foreign fund flow remains a key driver for markets, said Binod Modi Head-Strategy at Reliance Securities.
"Outcome of the Reserve Bank’s policy meeting would be crucial for the day. While RBI is broadly expected to maintain status quo, any sort of hawkish commentary, given the concerns over inflation due to excess liquidity, might result in hardening of bond yields and BFSI may come in pressure," he noted.
Given current valuations, a sharp up-move in broad indices looks difficult, he said, adding that midcap and smallcap outperformance should continue to persist in the near term.
US markets finished mostly higher as investors continued to focus on renewed hopes on fiscal stimulus.
"However, benchmark indices came off day's highs after Pfizer announced that it will be able to ship only 50 per cent of targeted vaccines in 2020 due to supply chain issues.
"A record surge in new COVID-19 cases, which touched 2 lakh on Wednesday, is being overshadowed by increasing possibility of agreement on COVID-19 relief package in coming days. However, the quantum of fiscal aid might not excite the street," he added.
Elsewhere in Asia, bourses in Shanghai, Hong Kong and Tokyo were in the red in mid-session deals, while Seoul was trading with gains.
Meanwhile, the global oil benchmark Brent crude futures were trading 1.81 per cent higher at USD 49.59 per barrel.