Markets ended the day higher ahead of the eagerly awaited Fed decision on lowering its monthly asset purchase programme which is likely to be made known by 11.30 pm IST.
Caution prevailed for most of the day with the Nifty trading in a tight range and finally ending higher by 49 points.
Among the top gainers in trade were real estate major DLF, NTPC, IDFC, Maruti and BPCL.
Dr Reddy's also rallied after the company got an approval for its anti cancer drug. Banking stocks had a good day of trade with notable gainers from the space being Axis Bank, State Bank of India, ICICI Bank and Bank of Baroda.
Investors continued to take shelter in defensives ahead of the Fed's crucial decision with pharma and FMCG stocks rallying.
Heavyweight, Reliance Industries also saw buying interest and ended the day higher by 1%.
Sun Pharma , however, lost ground for the second day in a row on selling pressure. Ranbaxy Labs which had lost as much as 30% in trade on Monday and recovered marginally on Tuesday ended the day higher.
Meanwhile, Asian markets ended the day mixed, with the Japanese Nikkei rallying more then 1% in trade. The Chinese Shanghai Composite also ended the day higher, while the Hong Kong's Hang Sang and the Jakarta Composite ended with losses.
Markets are expected to take cues from the Fed decision on its asset purchase programme tonight and the broad consensus is that there would be tapering of around $10 billion.