"Perhaps on Monday, some measures will be announced, which I do hope will provide stimulus to the markets," Finance Minister Pranab Mukherjee had said Sunday.
Markets have been volatile over the last few weeks amid worsening macro environment. The rupee has hit record lows, further dampening sentiments. Analysts said the new measures might shore up the rupee, and boost investor confident.
"The recent efforts and statements tell us that the rupee is near the bottom... investors need to start buying now," V K Sharma of HDFC Securities told NDTV Profit today.
At 09.20 a.m., the Sensex traded 110 points higher at 17,081, while the Nifty index gained 35 points to 5,181. The rupee rose nearly 1 per cent against the dollar at 56.59.
All groups of stocks traded higher on the BSE. On the Nifty index, tobacco major ITC was the only stock trading lower.
Private lender Axis Bank (1.94%), state owned miner Coal India (1.84%), and infra and cement major Jaiprakash Associates (1.8%) were the top three gainers in early trade.
The market breadth was extremely bullish, with over 90% stocks rising on the broader BSE 500 index.
Markets in Asia traded lower despite gains on the Wall Street Friday. Investors awaited the outcome of the EU summit later this week where Greek leaders are likely to renegotiate the country's international bailout.
(With inputs from AP)