The BSE Sensex gained over 60 points in early trade on Friday while the broader Nifty inched near the key 5,560 mark. The rupee, however, traded 26 paise lower against the dollar at 54.96.
Asian shares steadied on Friday after falling nearly 2 per cent this week amid concerns about the looming U.S. "fiscal cliff", while Japanese stocks rallied for a second day on expectations of further monetary policy easing after an election next month.
Indian markets have fallen for five straight days tracking global weakness and poor domestic macro data. The Winter Session of Parliament, starting next week, may throw up some cues for the markets now.
Independent analyst Sarvendra Srivastava expects a trading bounce.
"5,600-5,730 is the likely range... 5,600 remains a medium term support," he added.
At 09.40 a.m., the Sensex traded 42 points or 0.2 per cent higher at 18,514 while the broader Nifty advanced 6 points to 5,637.
Bharti Airtel, India's biggest mobile carrier rose 2 per cent and traded at the top of the 50-share Nifty. Bank of America Merrill Lynch has upgraded mobile carriers Bharti Airtel and Idea to "buy" from "neutral" on the back of positive outcome of the 2G auction.
BofA has raised the target price on Bharti to Rs 340 and Idea to Rs 105.
26 stocks traded lower on the Nifty. Drug maker Cipla saw profit booking and traded with over 1 per cent losses. Oil refiner Cairn India was the other stock trading with over 1 per cent cut.
On the broader BSE 500, Kingfisher Airlines shares traded 3 per cent lower, falling for the third straight day. Cash-strapped Kingfisher Airlines, which is yet to pay part of salaries to its employees, has sought more time to submit a comprehensive revival plan to the aviation regulator DGCA. United Spirits shares fell 2 per cent after a downgrade to "sell" by UBS. United Breweries shares were down another 4 per cent on the back of profit booking.
However, Biocon shares edged higher on the back of an agreement with Bristol-Myers Squibb for its oral insulin drug IN-105. Shares in L&T Finance Holdings rose 1.5 per cent, continuing a strong run of gains, on hopes it will benefit from a fresh allocation of banking licences.