Key benchmark indices Sensex and Nifty were trading higher by up to 1 per cent in late morning trade, pulling back from their life-time highs, as select banking, IT, auto and pharma stocks gained.
The government yesterday announced various measures to spur economy, including PSU banks' Rs 2.11 lakh crore capitalisation plan and Rs 6.92 lakh crore massive road building programme, which boosted the market sentiment.
Firmness in Asian stocks also supported gains on the bourses.
While, continued selling were seen in telecom, consumer durables, metal and realty stocks.
The 30-share Sensex resumed higher at 32,995.28 and soared to its intra-day life time high of 33,117.33 as banking stocks rallied.
The index retreated to a low of 32,804.60 in late morning due to profit booking but strong gains in SBI, ICICI, L&T and a recovery in IT major Infosys helped it trade higher by 324 points 0.99 per cent at 32,931.55 at 1140hrs.
While, the NSE 50-share Nifty was also trading up by 61.15 or 0.60 per cent to 10,268.85.
However, side counters were sluggish the S&P BSE Mid-Cap index was up 0.17 pct and the S&P BSE Small-Cap index up 0.05 pct. Both the indices underperformed the Sensex.
Major gainers were, SBIN by 19.65 pct, ICICI Bank 8.74 pct, Larsen 5.14 pct, AxiS Bank 2.49 pct, Infosys 1.27 pct and Powergrid 1.05 per cent.
However, Kotak Bank fell 3.25 pct, HDFC Bank 3.22 pct, HDFC 2.77 pct, BhartiAirtel 1.00 pct and Lupin 0.95 pct.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1306.76 crore yesterday, as per provisional data released by the stock exchanges.
Domestic institutional investors bought shares worth a net Rs 592.28 crore, as per provisional data.
Globally, Asian stocks rose following the overnight gains on Wall Street as upbeat corporate earnings results and optimism about global economic growth boosted investor sentiment.