Much awaited diesel price hike by the government also boosted the investor sentiment.
The Sensex has jumped by 380 points to 18,402 and the 50-share Nifty jumped 111 points to open at 5,546 levels.
Overnight, The Federal Reserve launched another aggressive stimulus program on Thursday, saying it would pump $40 billion into the US economy each month until it saw a sustained upturn in the weak jobs market.
The central bank's decision to tie its controversial bond buying directly to economic conditions was an unprecedented step that marked a big escalation in its efforts to drive US unemployment lower.
Stock prices jumped, while gold hit a six-month high as investors braced for higher inflation.
The US markets reacted positively to the move and closed higher. The Dow Jones ended higher by 1.5% at 13,540, Nasdaq advanced 1.3% to close at 3,154 and the S&P 500 closed higher by
Back home, the diesel price hike announced post the market hours yesterday also boosted the investor sentiment.
The government has raised price of diesel by Rs 5 per litre.
Buying is visible across the board all the Sensex stocks have opened higher. Hindalco is the top gainer from this space.
The stock has advanced 5% to open at Rs 115. Gail India, Tata Steel, ICICI Bank, Jindal Steel, SBI, Tata Power, Tata Motors, Sterlite Industries, Larsen & Toubro and Infosys have also opened higher by 2-5% each.
On the sectoral front, the BSE banking index- bankex is the top gainer. It has advanced 3% or 328 points to 12,031. Metal, realty, oil & gas, auto, PSU, capital goods, power and IT indices have also advanced 1.5-2.6% each.
Shares of state run, oil marketing companies, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation have rallied up to 6% after the government raised the price of diesel by Rs 5 per liter from today.
For the oil marketing companies, the under-recoveries over selling the fuel at a subsidized rate stood at Rs. 2,05,000 crore.
The broader markets have also opened on higher. The BSE mid-cap and small-cap indices have advanced 1% each.
The overall breadth is positive 1,100 stocks are advancing while 250 are declining.