The wide-based Nifty of the National Stock Exchange regained the psychological 5,000 points mark rising by 57.05 points, or 1.15 per cent to 5,012.85, for the first time since December 8 last year.

The 30-share Sensex, which had lost 14.58 points in the previous session, surged by 206.02 points, or 1.25 per cent, to 16,657.49.

Brokers said sentiments on the domestic bourses buoyed in line with a firming trend in other Asian markets following overnight gains in the US after surprisingly strong housing figures and International Monetary Fund's plan to expand its lending resources to counter Europe's debt crisis.

Expectations of encouraging third quarter earnings by corporates also triggered buying activity, they added.

In Asia, Hong Kong's Hang Seng Index rose by 0.75 per cent and Japan's Nikkei Index by 0.54 per cent in morning trade today.

The US Dow Jones Industrial average ended 0.78 per cent higher on Wednesday.

PREOPEN: Stocks to open up; Bharti may fall

The sensex is expected to start higher on Thursday in line with firmer Asian markets, but Bharti Airtel could fall after a Rs 10.67 billion ($210 million) tax demand by the government.

Mobile operator Bharti said it would challenge in court the tax demand over payments to international telecoms operators.

Asian shares rose to a two-month high and the euro firmed on Thursday after moves by the International Monetary Fund to help tackle the euro zone debt crisis.

“The overall sentiment seems to be positive”, said Ambareesh Baliga, chief operating officer at Way2Wealth Securities, adding an appreciating rupee has also underpinned investor confidence.

At 0249 GMT, the MSCI's broadest index of Asia Pacific shares outside Japan was up 0.96 per cent, the Nifty India stock futures in Singapore rose 1 percent.

STOCKS TO WATCH

* Kingfisher Airlines is expected to open higher after a report said that Hong Kong based SC Lowy Financial was in talks to invest $280 million in the debt-laden carrier, citing an unnamed source.

* DLF will be watched after the newspaper cited a company executive as saying the India's largest listed developer is in talks to sell a convention centre project and its wind power business.

FACTORS TO WATCH

* Euro enjoys short squeeze; Aussie eyes jobs data

* Oil falls as weak demand outlook trumps IMF hopes

* Asian shares hit 2-month highs on IMF hopes

* Wall St gains 1 pct as IMF gives Europe hope

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