The Sensex resumed higher at 20,732.44 advanced further to 20,784.03 before quoting at 20,735.38 1030 hours, showing a gain of 75.86 or 0.37 per cent from its last close.
The NSE 50-share Nifty also moved up by 21.30 points or 0.35 per cent to 6,176.00 at 1030 hours.
Foreign institutional investors (FIIs) bought shares worth a net Rs 159.55 crore on yesterday, as per provisional data from the stock exchanges.
Brokers said emergence of buying by funds at prevailing levels amid a firming trend in the Asian region in line with overnight gains on the US markets following upbeat factory output data ahead of Federal Reserve meeting, mainly influenced the trading sentiments.
Asian markets edged higher early trade on the back of rising US manufacturing output and a jump in euro zone business activity.
Key benchmark indices in Taiwan, Hong Kong, Singapore, Japan and South Korea rose by 0.38 pct to 1.53 pct, while China's Shanghai Composite fell 0.59 pct.
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