At 10.50 a.m., the Sensex traded 301 points or 1.6 per cent higher at 18,650 while the broader Nifty advanced 97 points to 5,621. The rupee jumped 0.9 per cent and traded at 53.88 to the dollar.
Despite the current political instability, investors are hoping the government will go through with reforms and that the pace will continue.
"There is no need to press the panic button as far as the domestic polity is concern... Markets may rise to 5,650 or 5,900 on account of global liquidity," Mehraboon Irani of Nirmal Bang Securities told NDTV Profit.
Strong buying was seen in aviation and retail stocks. Debt laden Kingfisher Airlines surged 4.6 per cent while SpiceJet traded with over 2.6 per cent gains. Pantaloon Retail shares jumped nearly 7 per cent.
All groups of stocks traded higher on the BSE. Banks, metals, power, and capital goods stocks jumped over 2 per cent. On the Nifty, 49 of the 50 stocks traded higher.
Reliance Infra was the top Nifty gainer, up nearly 6 per cent. Heavy equipment maker BHEL traded with over 4 per cent gains. State-run refiner BPCL was the only stock trading lower on the Nifty.
Assets from Asian shares to oil to gold rose and the euro steadied as stimulus measures from major central banks continued to buoy investor confidence, offsetting weak economic data. The MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 per cent after slipping to its lowest in nearly a week on Thursday. Tokyo's Nikkei stock average added 0.6 percent.
(With inputs from Thomson Reuters)