The benchmark BSE Sensex surged 167 points in the morning trade on fresh buying, mainly in banking, metal, capital goods, IT, teck and refinery sectors, triggered by firm global cues.
The Sensex resumed higher at 21,091.46 and firmed up further to 21,202.46 before quoting at 21,200.12 at 1030 hours, showing a gain of 167.24 points or 0.80 per cent from its last close.
The NSE 50-share Nifty also rose 55 points, or 0.88 per cent, to 6,296.85 at 1030 hours.
Coal India gained 2.40 per cent after the company's board approved payment of interim dividend of Rs 29 per share for the financial year ending March 2014.
(1.39 pct) and Reliance Industries (RIL) (1.31 pct).
Asian stocks rose in their early trade on optimism the global economy is strengthening. Key benchmark indices in Hong Kong, Japan, Singapore, South Korea and Taiwan were up 0.21 per cent to 1.8 per cent while China's Shanghai Composite fell 0.63 per cent.
US stocks rose yesterday, giving the Standard & Poor's 500 Index biggest gain of the year, as better-than-forecast retail sales and corporate merger data signalled confidence in the economy.