The Sensex surged nearly 300 points and the Nifty was trading above the 9,900-mark due to hectic short-covering ahead of August derivatives expiry tomorrow and a positive trend in Asian markets as concerns about North Korea's firing of a missile over Japan ebbed.

At 1.35 p.m., the 30-share BSE index Sensex was up 296.42points or 0.94 per cent at 31,684.81 and the 50-share NSE index Nifty was up 100.8 points or 1.03 per cent at 9,896.85.

Among BSE sectoral indices, oil & gas index was the star-performer and was up 2.36 per cent, followed by metal 2.28 per cent, PSU 1.59 per cent and realty 1.58 per cent.

Top five Sensex gainers were HDFC (+2.86%), Reliance (+2.86%), Adani Ports (+1.35%), Coal India (+1.32%) and HDFC Bank (+1.12%), while the only loser was M&M (-0.22%).

Financial stocks accounted for more than a third of gains on the NSE index, with Nifty financial index gaining 1.2 per cent. Housing Development Finance Corp Ltd rose 2.3 per cent after giving up 2.2 per cent on Tuesday.

Private-sector lenders such as ICICI Bank Ltd and HDFC Bank Ltd were up about 1 per cent each.

Ujjivan Financial Services Ltd hit a one-and-a-half-month high after its subsidiary Ujjivan Small Finance Bank was granted “scheduled bank” status by the Reserve Bank of India, a lender category determined by the central bank.

Meanwhile, the Nifty metal index advanced 2.4 per cent, with JSW Steel Ltd and Hindalco Industries Ltd both surging about 4 per cent.

“What we are seeing is a bounce-back from Tuesday's fall," said Sacchidanand Uttekar, equity technical analyst at Motilal Oswal Securities.

According to traders, a rebound in other Asian markets as investors shrugged off geopolitical tensions a day after North Korea fired a missile that flew over northern Japan influenced the trading sentiment here.

Besides, fresh spell of buying by retail investors and uninterrupted buying by domestic institutional investors (DIIs) propped up the domestic sentiment.

As per provisional data, foreign portfolio investors (FPIs) sold shares worth Rs 1,459.64 crore on a net basis yesterday. Domestic institutional investors (DIIs) bought shares worth Rs 1,391.33 crore.

Asian shares

The dollar rebounded from a 2-1/2-year low on Wednesday as concerns about North Korea's firing of a missile over Japan ebbed, but Asian stocks were muted despite Wall Street's higher close.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat in early trade. South Korea's KOSPI share index and Australian shares both inched up 0.1 per cent. Japan's Nikkei rose 0.5 per cent as the yen weakened.