The market was hovering in a narrow range near day's high in early afternoon trade. At 12:20 IST, the barometer index, the S&P BSE Sensex, was up 381.91 points or 1.09% at 35,531.92. The Nifty 50 index was up 114.20 points or 1.08% at 10,663.35.

Investor sentiment got a boost after the appointment of former bureaucrat Shaktikanta Das as the new RBI Governor. In addition, investors took fresh position in shares after the outcome of Assembly election results. Positive global markets also aided sentiments.

Among secondary barometers, the BSE Mid-Cap index was up 2.04%. The BSE Small-Cap index was up 1.79%.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1739 shares rose and 539 shares fell. A total of 104 shares were unchanged.

Shares of non-banking financial companies were in demand. Mahindra & Mahindra Financial Services (up 6.02%), IDFC (up 4.57%), IIFL Holdings (up 3.90%), Indiabulls Housing Finance (up 3.87%), Edelweiss Financial Services (up 3.80%), Cholamandalam Investment and Finance Company (up 3.42%), Reliance Capital (up 2.80%), LIC Housing Finance (up 2.17%), Bajaj Finance (up 1.89%), Shriram Transport Finance Corporation (up 1.73%), Bajaj Finserv (up 1.59%), Muthoot Finance (up 1.56%), Manappuram Finance (up 1.29%) and Muthoot Capital Services (up 1.07%), edged higher.

IT shares rose across the board due to weak rupee. Oracle Financial Services Software (up 2.13%), MindTree (up 1.89%), Tech Mahindra (up 1.75%), HCL Technologies (up 1.38%), Persistent Systems (up 1.22%), Wipro (up 0.78%), TCS (up 0.51%), Hexaware Technologies (up 0.14%), Infosys (up 0.14%) and MphasiS (up 0.14%), edged higher.

A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 72.0575, compared with its close of 71.855 during the previous trading session.

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. Das has been appointed for a term of three years.

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.