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At 10:44 am, the Sensex traded 153.39 points - or 0.39 per cent - higher at 39,745.47 while the Nifty was up 43.90 points - or 0.37 per cent - at 11,891.45.
Top percentage gainers on the 50-scrip index at the time were Axis Bank, Indiabulls Housing Finance, Bharti Infratel, Mahindra and Tata Motors, trading between 1.43 per cent and 1.90 per cent higher.
Axis Bank, ICICI Bank and HDFC contributed the most to the advances on the Sensex.
Market breadth supported gains with 950 stocks trading higher on the BSE against 375 struggling with losses. On the NSE, 1,069 stocks advanced while 492 declined.
Prime Minister Narendra Modi reached Japan early this morning for the G20 summit on the sidelines of which he will attend several key meetings with world leaders including US President Donald Trump.
Mr Trump said on Twitter he looks forward to speaking with PM Modi about a recent increase in India's already high tariffs against the US. "This is unacceptable and the tariffs must be withdrawn," he said.
India had imposed retaliatory tariffs on 28 US items earlier this month, after the Trump administration ended trade concessions for India on June 1.
Equities in other Asian markets turned higher following a media report the US and China have tentatively agreed to a truce in their trade war, ahead of a closely-watched meeting between the two nations this weekend.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent. China's blue-chip index rose 1.4 per cent, South Korea's KOSPI 0.6 per cent, and Hong Kong's Hang Seng and Japan's Nikkei gained 0.8 per cent each. Overnight in the US, the Dow and the S&P 500 indexes ended 0.04 per cent and 0.12 per cent respectively, whereas the Nasdaq finished 0.32 per cent higher.
The Sensex and Nifty had each ended 0.40 per cent higher on Wednesday.
(With inputs from Reuters)