The prevailing positive sentiment on global bourses may support the domestic exchanges as well. Firm Asian markets, on cue from an overnight gain in US stocks, may spark another rally in the domestic market.
Premier indices in Shanghai, Hong Kong, Singapore, South Korea and Taiwan had already shot up between 0.08-1.22%.
The US market ended higher on Tuesday. The Dow Jones industrial average ended 27.48 points, or 0.22%, higher at 12,370.70. The Standard & Poor's 500 Index was up 4.35 points, or 0.31%, at 1,415.11, while the Nasdaq Composite Index was up 6.36 points, or 0.26%, at 2,407.54.
However, lack of participation from FIIs due to a Christmas vacation and an overnight gain in price of crude oil may cap the upside today.
US crude oil price rose 25 cents to $62.66 a barrel after Iran threatened to use oil exports as a weapon following the UN Security Council's decision to impose sanctions on its trade in nuclear goods.
As per provisional data, FIIs were net sellers of equities worth Rs 210.28 crore. The benchmark BSE Sensex rallied 237 points (1.76%), to settle at 13,708.34 on 26 December 2006.
Trade may remain volatile due the impending expiry of the December futures contract on tomorrow (28 December 2006).