The Nifty rallied 256.35 points or 1.23% to settle at a record closing high of 21,182.70. During the session, it jumped 284.55 points or 1.35% to 21,210.90, its record intra-day peak.
Among the Sensex firms, Tech Mahindra, Infosys, Wipro, HCL Technologies, IndusInd Bank, Bajaj Finance, Bajaj Finserv and Mahindra & Mahindra were the major gainers.
On the other hand, Power Grid, Nestle, JSW Steel, Maruti, Titan and Tata Motors were among the laggards.
In Asian markets, Seoul and Hong Kong settled in positive territory, while Tokyo and Shanghai ended lower.
European markets were trading in the green. The US markets ended with significant gains on Wednesday.
The Federal Reserve kept its key interest rate unchanged on Wednesday for a third straight time, a sign that it is likely done raising rates after having imposed the fastest string of increases in four decades to fight painfully high inflation.
The Fed's policymakers also signalled that they expect to make three quarter-point cuts to their benchmark interest rate next year.
"The market continued its exuberance and hit a fresh high amid the dovish commentary from the Federal Reserve, signalling at least three rate cuts in 2024. Further, the sharp fall in US bond yields improved investors' confidence.
"An upgrade in India's GDP forecast, ease in global oil prices, and the RBI decision to clamp down inflation to the target level led to a broad-based rally with outperformance from Realty and IT," said Vinod Nair, Head of Research at Geojit Financial Services.
Foreign Institutional Investors (FIIs) continued to remain buyers as they bought equities worth Rs 4,710.86 crore on Wednesday, according to exchange data.
Global oil benchmark Brent crude climbed 1.74% to USD 75.55 a barrel.
The BSE benchmark advanced 33.57 points or 0.05% to settle at 69,584.60 on Wednesday. The Nifty gained 19.95 points or 0.10% to 20,926.35.