The Congress party, which heads the federal coalition in New Delhi, was trailing in fourth place as counting of votes got underway in the politically important state of Uttar Pradesh.
A setback for the Congress party in UP would make it harder for New Delhi to pursue policies needed to shore up economic growth. The Congress was also behind in Punjab.
"The market will be volatile until a clear picture of the election result emerges. There will be some speculative trading ahead of that," said Jagannadham Thunuguntla, head of research at SMC Global Securities in New Delhi.
"A poor performance by Congress in the elections will make policy making tougher for the government and it will also lead to announcement of some populist measures in the budget, which would be a bad news for the market," Thunuguntla said.
Maruti Suzuki was up nearly 2 per cent after Credit Suisse upgraded the top automaker to outperform from underperform, citing expectations for higher sales and margins for the fiscal year starting on April 1.
The main 30-share BSE index was up 1.67 per cent at 17,652.57 by 11:04 a.m. (0534 GMT), with all but one of its components rising. It fell as much as 1 per cent in early trade to its lowest level in more than a month.
The benchmark is down nearly 6 per cent since February 21, when it climbed to its highest close in nearly seven months. Still, the index is up 13 per cent so far this year, helped by strong foreign fund inflows.
Infosys Technologies rose 1.6 per cent to Rs 2,855.30, helped by encouraging U.S. economic data, with services sector in the world's largest economy growing at its fastest pace in a year in February.
India's No. 2 software services company gets more than half its revenue from the United States.
State Bank of India, the country's top lender, was up 2 per cent at Rs 2,219.30 and rival ICICI Bank rose 0.6 per cent to Rs 875.90 on hopes for an interest rate cut by the central bank later this month.
The Reserve Bank of India is scheduled to review monetary policy on March 15.
Reliance Industries, which has the heaviest weighting in the BSE index, fell 0.6 per cent to Rs 792.60. The stock rose more than 18 per cent in the first two months of this year in a liquidity driven broader market rally.
The 50-share NSE index was up 1.6 per cent at 5,365.50 points. In the broader market, there were more than 2 gainers for every loser on volume of more than 225 million shares.
STOCKS ON THE MOVE
* Tata Communications rose as much as 1.3 per cent to Rs 238.40. Sources told Reuters the company is seeking $2 billion in loans to finance a potential bid for London-listed Cable & Wireless Worldwide.
* Subex Ltd was up 6.4 per cent at Rs 31.60, after the technology services provider to telecom companies said it has won a multi-million dollar fraud management and revenue assurance contract from a middle eastern mobile operator.
MAIN TOP 3 BY VOLUME
* Lanco Infra on 18 million shares
* Jaiprakash Associates on 15 million shares
* Reliance Power on 11 million shares
Copyright @ Thomson Reuters 2012