The benchmark S&P BSE Sensex trimmed its initial gains, but was still quoted higher by 96 points on buying from operators mainly in capital goods, auto, realty, power and banking sectors coupled with higher Asian cues.
The market may remain volatile ahead of the expiry of futures and options January contract tomorrow.
Maruti Suzuki India (MSIL) jumped 7.02 per cent on bargain hunting as the company's board has approved the expansion project in Gujarat.
The Sensex resumed higher at 20,784.04 and firmed up further to a high of 20,828.68 on strong buying. However, it fell afterwards to 20,761.10 on selling pressure before quoting at 20,779.82 at 1030 hours, still showing a gain of 96.31 points or 0.47 per cent.
The NSE 50-share Nifty also rose by 31.70 points or 0.52 per cent to 6,157.95 at 1030 hours.
Other gainers were Sun Pharma 2.93 per cent, BHEL 2.04 per cent, Tata Motors 1.50 per cent, Coal India 1.34 per cent, Larsen 1.33 per cent, ICICI Bank 1.23 per cent and Cipla 0.95 per cent.
Asian markets edged higher in their early trade after Turkey stunned investors with a huge hike in interest rates, stirring hopes the drastic action would short-circuit a vicious cycle of selling in emerging markets and revive risk appetite generally.
Key benchmark indices in Hong Kong, China, Japan and South Korea rose by 0.31 per cent to 2.18 per cent, while Singapore fell 0.55 per cent.
Foreign institutional investors (FIIs) sold shares worth a net Rs 1,267.35 crore as per the provisional data from the stock exchanges.