The 30-share index rose 100.48 points, or 0.29 per cent, to 34,070.12, with all sectoral indices led by PSU, consumer durables, auto and metal trading in the positive zone, rising by up to 0.57 per cent.
The gauge had gained 176.26 points in the previous session.
The NSE index Nifty too edged higher by 29.45 points, or 0.28 per cent, to 10,534.25.
Brokers said improved liquidity in the market following continuous foreign fund inflows and increased buying by domestic institutional investors after the government moved forward on its bank recapitalisation programme boosted trading sentiments.
The finance ministry on Thursday sought Parliament’s nod for extra expenditure of Rs 80,000 crore towards recapitalisation of bad loans-saddled public sector banks through bonds.
Foreign portfolio investors (FPIs) bought shares worth a net of Rs 212.05 crore, while Domestic Institutional Investors (DIIs) made purchases worth a Rs 325.24 crore on Thursday, as per provisional exchange data.
The rupee appreciating to over 2-1/2 year high of 63.31 against the dollar (intra-day) and a positive leads from other Asian bourses, led to a better trend in the domestic market.
Expectations of encouraging third quarterly earnings from blue-chip companies, to be released next week too influenced sentiment.
Among other Asian markets, Japan’s Nikkei was trading higher by 0.18 per cent, while Hong Kong’s Hang Seng rose 0.51 per cent in their early deals. The Shanghai Composite index too was up by 0.07 per cent.
The US Dow Jones Industrial Average continued its record-setting run by ending 0.61 per cent higher on Thursday.