The Sensex was trading higher by 118 points at 18,478 points at 9.20 am IST, while the Nifty was trading higher by 38 points at 5592 points.

Banking stocks continued to be in the limelight with shares of ICICI Bank, Axis Bank and State Bank of India all rallying more than 1% in early trade.

Metal stocks too were also in in demand with Tata Steel, Sterlite Industries and Hindalco all trading higher.

Aviation and retail stocks bounced back after Thursday's sharp slide, following a government notification on FDI. Shares of Trent was trading higher by Rs 45 at Rs 1135, while shares of Pantaloon Retail jumped more Rs 13 at Rs 187.

Reliance Communications was up almost 4% after the company revised its tariff rates. Among the losers from the Nifty stocks were Jindal Steel, Tata Power, Ambuja Cements and BPCL.

Shares of heavyweight Reliance Industries gained more than 1%, while shares of IT companies like TCS and Infosys were also trading firm.

Markets are expected to continue their upward momentum following the strong set of reforms initiated by the Manmohan Singh government. Strong global markets are also likely to support Indian equities.

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