After rallying over 300 points, the 30-share BSE Sensex ended 169.14 points, or 0.42 per cent, higher at 40,581.71.
Similarly, the broader NSE Nifty settled 61.65 points, or 0.52 per cent, higher at 11,971.80.
Tata Motors was the top gainer in the Sensex pack, rallying 7.17 per cent, followed by Yes Bank 5.96 per cent, Vedanta 3.68 per cent, Tata Steel 3.29 per cent, SBI 2.91 per cent and Kotak Bank 1.76 per cent.
On the other hand, Infosys fell 2.63 per cent, ONGC 1.68 per cent, HCL Tech 1.51 per cent, TCS 1.20 per cent and Bharti Airtel 0.95 per cent.
According to traders, domestic investors following cues from global markets which advanced on the US Federal Reserve's dovish outlook.
The Federal Reserve made no change in interest rates in an effort to maintain the economic growth. Fed chief Jerome Powell said the US outlook "remains favourable despite global developments and ongoing risks" as he described the grinding US-China trade war as a drag on global growth.
Investors are also awaiting factory output data scheduled to be released later in the day, traders said.
Bourses in Hong Kong, Seoul and Tokyo ended on a positive note, Shanghai slipped into the red.
Stocks in Europe were also trading higher.
On the currency front, the rupee appreciated 21 paise against the US dollar to 70.63 (intra-day).
Brent futures, the global oil benchmark, rose 0.74 per cent to USD 64.19 per barrel. ANS MR MR