Shares on Thursday hovered near a six-week high, boosted by private lender IndusInd Bank after its quarterly profit surged, while the rupee weakened to be just shy of a record low it touched earlier this week.
Nifty rose 0.3% at around 16,570, in early trade, while Sensex was up 0.27% at around 55,550. Both the indices closed at a more than six-week high on Wednesday.
"The recent rally (in Indian markets) is being led by banks and automobiles. There has been a growth in loans in banks' results, and non-performing assets have dropped, which has helped them to improve margins," said AK Prabhakar, head of research, IDBI Capital Market.
"Chip crisis is easing off and raw material costs have come down for automobile companies and they have passed on the hikes to customers. The market is expecting better margins," Prabhakar said.
Nifty has risen about 5% so far this month. Nifty Bank and Nifty Auto are up 8% and 7.4%, respectively.
IndusInd Bank jumped 6.3% after it reported a 64% surge in first-quarter net profit on Wednesday, beating analysts' estimates, on the back of a 30% drop in provisions and 16% growth in net interest income.
Wipro cut early losses to trade up 0.5% on seeing strong IT services revenue growth in the second quarter after its June-quarter profit declined about 21%.
Tata Communications surged 9% after it posted about 84% jump in profit for the June quarter.
Meanwhile, investors will watch out for the Indian central bank after a source said the RBI was prepared to sell another $100 billion to defend the rupee from rapid falls.