The BSE Sensex was trading higher by nearly 200 points at 29,021 on fresh buying by retail investors amid a mixed trend in other Asian markets.
The broader NSE Nifty too followed suit, trading beyond the 8,900-mark.
Brokers said that besides buying by retail investors, pumping of funds into the market by domestic institutional investors too contributed to the recovery.
At 1.40 a.m., the 30-share BSE index Sensex was up 187.63 points or 0.65 per cent at 29,020.08 and the 50-share NSE index Nifty was up 55.8 points or 0.63 per cent at 8,953.35.
Among BSE sectoral indices, oil & gas index gained the most by 1.22 per cent, followed by power 1.02 per cent, auto 1.01 per cent and PSU 0.97 per cent. On the other hand, consumer durables index was down 0.29 per cent, IT 0.28 per cent and TECk 0.19 per cent.
Top five Sensex gainers were RIL (+3.44%), Power Grid (+2.15%), NTPC (+1.6%), Asian Paints (+1.15%) and Tata Motors (+1.04%), while the major losers were Sun Pharma (-1.14%), HUL (-0.95%), TCS (-0.9%), Wipro (-0.47%) and GAIL (-0.22%).
Early trade
The 30-share index, which had lost 152.04 points in the previous two sessions, recovered sharply by 216.60 points or 0.75 per cent to trade at 29,049.05.
The NSE Nifty jumped 37.95 points or 0.42 per cent to 8,935.50.
RIL shares climbed 3.44 per cent to Rs 1,301.70 on sustained buying after the company announced that 15 promoter groups will transfer 118.99 crore shares to eight other promoter group entities at Rs 1,100.78 per share.
Bucking the trend, shares of IT and technology companies were down on sustained selling.
US stock futures dropped and Asian shares were on the defensive on Monday as investors weighed the near-certain prospect of an interest rate hike in the United States this month against news of slower growth in China this year.
MSCI's broadest dollar-denominated index of Asia-Pacific shares outside Japan was up 0.2 per cent but Seoul shares were down 0.2 per cent, hitting their lowest levels since early February at one point.
The US Dow Jones Industrial Average had ended 0.01 per cent higher on Friday.