The BSE Sensex gains 0.2 percent, while the Nifty advances 0.11 percent. Gains also track higher Asian shares after a survey shows China's manufacturing sector expanded for the first time in 13 months in November.
Banking stocks are among the leading gainers on hopes the winter session of parliament kicking off on Thursday will pass bills to liberalise the insurance, pension and banking sectors.
The government's move to allow state-run Life Insurance Corp (LIC) to triple the maximum stake it can hold in other companies to 30 percent also helping banks, dealers say.
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The government owns stakes in lenders including SBI and Axis, reducing potential overhang fears.
State Bank of India gains 1.2 percent, after falling 2.3 percent in November as on Wednesday's close. Axis Bank gains 1.6 percent.
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