The key equity indices extended early gains and hit fresh intraday high in morning trade. At 10:20 IST, the barometer index, the S&P BSE Sensex, was up 301.90 points or 0.86% at 35,451.91. The Nifty 50 index was up 89.70 points or 0.85% at 10,638.85. The gains were backed by strength in banks and metal shares.

Among secondary barometers, the BSE Mid-Cap index was up 1.57%. The BSE Small-Cap index was up 1.51%.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1499 shares rose and 366 shares fell. A total of 81 shares were unchanged.

Banks shares were in demand. Among private sector banks. Yes Bank (up 4.14%), Kotak Mahindra Bank (up 3%), Federal Bank (up 1.56%), HDFC Bank (up 0.86%), IndusInd Bank (up 0.79%), Axis Bank (up 0.65%), ICICI Bank (up 0.34%) and RBL Bank (up 0.01%), edged higher. City Union Bank was down 0.45%.

Among public sector banks, Bank of Maharashtra (up 8.39%), Corporation Bank (up 5.28%), United Bank of India (up 4.54%), Central Bank of India (up 4.01%), Bank of India (up 3.89%), Dena Bank (up 3.72%), UCO Bank (up 2.67%), Union Bank of India (up 2.38%), Andhra Bank (up 2.24%), Vijaya Bank (up 2.18%), Syndicate Bank (up 1.75%), Canara Bank (up 1.27%), Allahabad Bank (up 1.24%), Indian Bank (up 1.22%), Punjab & Sind Bank (up 1.1%), Punjab National Bank (up 1.09%), Bank of Baroda (up 1.06%), State Bank of India (up 0.71%) and IDBI Bank (up 0.08%), edged higher.

Metal shares rose. Hindustan Copper (up 2.6%), Hindalco Industries (up 2.1%), Tata Steel (up 1.88%), Steel Authority of India (up 1.78%), Jindal Steel & Power (up 1.6%), National Aluminium Company (up 1.45%), NMDC (up 1.2%), Vedanta (up 1.19%), Hindustan Zinc (up 0.68%) and JSW Steel (up 0.15%), edged higher.

Meanwhile, the government on Tuesday appointed Shaktikanta Das, member of the fifteenth finance commission, as the governor of the Reserve Bank of India (RBI), a day after Urjit Patel resigned.

On the political front, the Congress party is set to form governments in Chhattisgarh and Rajasthan and is leading in Madhya Pradesh. However, in Mizoram, Congress gave way to the MNF while in Telangana, the TRS retained power.

The Election Commission on Wednesday released the final tally of seats for the Madhya Pradesh assembly elections. The Congress won 114 seats, with the BJP coming in a close second with 109. The Bahujan Samaj Party won two seats and the Samajwadi Party one seat. Four seats went to independents. The Congress is, however, two short of the simple majority mark, 116 seats, in the 230-member Assembly.

Overseas, Asian stocks were trading higher as US President Donald trump sounded upbeat about a trade deal with China.

In a media interview, Trump said talks were taking place with Beijing by phone and he would not raise tariffs on Chinese imports until he was sure about a deal. He also said he would intervene in the Justice Department's case against a top executive at China's Huawei Technologies if it would serve national security interests or help close a trade deal. Canadian court on Tuesday granted bail to the executive in a move that could help placate Chinese officials angered by the arrest.

US stocks closed mostly lower Tuesday in a session that saw the key indexes weave in and out of positive territory as investors weighed mounting political tension in the nation's capital against renewed optimism over US-China trade talks.

The US and China launched formal trade talks with a phone call. In the call, China informed US officials that it had agreed to reduce tariffs on US autos to 15%, down from 40%.

On the data front, the National Federation of Independent Businesses issued its small business optimism index for November, showing it fell to 104.8 from 107.1 in October. Further, the wholesale cost of goods and services rose by 0.1% in November. Year-over-year rises in producer prices, however, fell to 2.5% from 2.9%, according to the Labor Department.