The Nifty gains 1.1 percent and the Sensex is up 1.25 percent, after three consecutive days of declines. Bank Nifty surges 5.4 percent after the Reserve Bank of India eased cash and bond holding rules for banks on Tuesday.
The RBI relaxed rules on mandatory bond holdings for banks, which would help protect lenders from large mark-to-market losses and said it would buy long-dated government bonds worth 80 billion rupees.
State Bank of India Ltd (SBI.NS) gains 5.5 percent, while ICICI Bank Ltd (ICBK.NS) is up 3.6 percent.
Among banks whose bulk of lending activities are financed by wholesale deposits, Yes Bank Ltd (YESB.NS) gains 15.7 percent while IndusInd Bank Ltd (INBK.NS) is up 10.8 percent.
Tata Motors Ltd (TAMO.NS) gains 1.6 percent ahead of its annual shareholders meeting later in the day.