Stocks extended early gains and hit intraday high in morning trade. At 10:22 IST, the barometer index, the S&P BSE Sensex, was up 194.57 points or 0.55% at 35,506.70. The Nifty 50 index was up 38.45 points or 0.36% at 10,639.60. Sentiment was boosted by positive Asian stocks.

Domestic stocks drifted higher in early trade on bargain hunting after three-day fall.

On the political front, the outcomes of the five state elections will likely set the tone for the general elections next year. Voting in Rajasthan and Telangana is underway today, 7 December 2018 and the counting of votes in all the states will be done on 11 December 2018. Assembly elections in Madhya Pradesh and Mizoram were held on 28 November 2018. The election in Chhattisgarh Assembly was held in two phases on 12 and 20 November 2018.

The S&P BSE Mid-Cap index was up 0.08%. The S&P BSE Small-Cap index was up 0.06%.

The market breadth, indicating the overall health of the market, was positive. On the BSE, 977 shares rose and 878 shares fell. A total of 113 shares were unchanged.

Overseas, Asian stocks were trading higher Friday as investors grappled with shifting indications on Sino-American trade talks and prospects for a pause in Federal Reserve tightening.

US stocks closed mostly lower Thursday after a dramatic session that saw the Dow Jones Industrial Average plunge more than 700 points at one point on fears that the arrest of a Huawei executive would reignite trade worries. However, the market clawed back most of its losses on a report that the Federal Reserve may turn more accommodative.

Market participants are also monitoring a two-day meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, which is slated to wrap up Friday. Crude-oil prices renewed their descent after the Saudi energy minister proposed a smaller-than-expected cut to production, but added that the oil cartel hadn't yet agreed to any production declines.

Back home, Kotak Mahindra Bank (up 6.05%), Asian Paints (up 1.85%), Infosys (up 1.31%), ITC (up 1.14%) and Power Grid Corporation of India (up 1.12%) edged higher from the Sensex pack.

Yes Bank (down 1.52%), Tata Steel (down 1.11%) and Vedanta (down 1%) edged lower from the Sensex pack.

Zydus Wellness rose 0.93% to Rs 1,249.55. The company said it is planning to raise Rs 2574.99 crore through issue of shares on a preferential basis. The firm's board approved issuing equity shares of face value of Rs 10 each on a preferential basis to Cadila Healthcare, True North, Pioneer Investment Fund and Zydus Family Trust. The announcement was made after market hours yesterday, 6 December 2018.