Reuters Market Eye - Shares in Sun Pharmaceutical Industries gain 2 percent and Ranbaxy Laboratories adds 3.7 percent.
India's foreign investment promotion board (FIPB) approves the transaction between the companies.
The approval makes it closer to remove one more regulatory hurdle for the merger, analysts say.
Sun Pharma agreed to buy Ranbaxy in a $3.2 billion in April.
(Reporting by Indulal PM)