The BSE benchmark index, which had gained 154 points in the previous session, closed higher by 36.83 points, or 0.22 per cent to settle at 16,896.63 led by stock of metal, capital goods and healthcare sectors.
In the 30-share Sensex, 18 stocks closed with gains while 12 ended in negative zone. The uptrend was supported by Sterlite Industries, Tata Steel, Reliance Industries, Sun Pharma, Tata Motors, Hero MotoCorp and Dr Reddy's Lab.
Brokers said sentiment remained better on expectations that the Fed might expand stimulus measures when it concludes two-day meeting later today.
"It was a choppy for the broader markets, however, strong stock specific action was seen...The US FOMC outcome is expected to dominate our markets tomorrow as well," said Milan Bavishi, Head Research, Inventure Growth & Securities.
The market was further supported by the trend in Asian stocks which surged to a one-month high and better opening in Europe followed by an overnight gains in the US market.
Indices in Hong Kong, Japan, Korea and Indonesia closed up in the 0.3-1.2 per cent range while indices in France, Germany and the UK were trading higher in initial trading.
On similar lines, the broad-based National Stock Exchange index Nifty rose by 16.70 points, or 0.33 per cent to 5,120.55, after touching day's high of 5,141.70.
Meanwhile, rupee was trading at 56.07 against the US dollar on thin volumes.