All sectoral indices led by FMCG, realty, capital goods, metal and auto were in the green, rising up to 1.76 per cent.
Also, the NSE Nifty gained 62.55 points, or 0.66 per cent, to 9,490.45 points.
Trading sentiment got a boost after the defence ministry last week broadly finalised a policy under which select private firms will be roped in to build military platforms like submarines and fighter jets in India in partnership with foreign entities. FMCG giant ITC rose the most among 30 Sensex constituents, climbing 2.82 per cent to Rs 293.95.
Engineering and construction giant Larsen & Toubro rose 1.34 per cent to Rs 450.60. Adani Ports rose by 1.75 per cent and TCS by 1.5 per cent. Tata Motors and Bharti Airtel rose by around 1 per cent in early trade. ICICI Bank, Infosys and Reliance Industries were also trading with gains of up to 1 per cent. Among other stocks, BEL and BHEL too were up by 2.12 per cent. Reliance Defence and Engineering was up 2.28 per cent.
State Bank of India, which posted two-fold jump in net profit for the last quarter of FY2016-17, was trading down by over 1 per cent due to profit booking by investors after a recent rally in the stock. Losses of up to 1 per cent in Sun Pharma, HDFC, Asian Paints and Gail capped the gains of the benchmark Sensex.