The Sensex is up 0.25 percent while the Nifty gains 0.23 percent. Gains come after the wholesale price index rose a slower-than-expected 7.24 percent.
Stocks in rate-sensitive sectors such as banks and real estate are leading the gains on rising hopes the Reserve Bank of India will move towards easing interest rates starting early next year.
The RBI's next policy review is on December 18. Although the central bank is not expected to ease policy then, traders said they could cut the cash reserve ratio or sound more dovish on inflation.
ICICI Bank gains 0.6 percent, while State Bank of India is up 1.7 percent.
In the real estate sector, DLF is up 1.3 percent while Unitech gains 0.9 percent.