The benchmark Sensex advanced by 135 points during the early trade on Monday led by PSU bank stocks.

It opened higher at 40,431.08,from its Friday's close of 40,356.69. The Nifty also added 35.80 pts to trade at 11,931.25.

"Indian markets showed some initial gains aided by continued momentum in telecom stocks over reports of the government considering a floor on tariffs," said Deepak Jasani of HDFC Securities.

SBI, beneficiary of telecom sector respite and Essar steel resolution, and BPCL surged after FM's statement of targeting completion of its divestment by March, Jasani added.

Bharti Airtel advanced over 3 per cent to claim the top gainer's spot followed by State Bank of India, by nearly 2 per cent.

Foreign Portfolio Investors sold Rs 1,008.37 crore worth of stocks on Friday while the Domestic Investors bought scrips worth Rs 537.74 crore.

Yes Bank, Mahindra and Mahindra, ONGC were the top losers during the early trade.

The US markets closed higher as investors remained positive on progress seen in US-China trade talks.