The Sensex ended the day above the 18,000 mark, closing the day at 18000.03 points, while the Nifty ended the day higher by 41 points. Among the shares that gained in trade were Tata Motors, Tata Steel, Wipro and SAIL.
Shares of Siemens was down more than 2% following reports that Siemens AG is selling a 1.2 percent stake in its Indian unit Siemens Ltd.
Banking stocks ended the day higher with shares of ICICI Bank, Axis Bank and State Bank of India all closing up.
Among the losers in trade were Reliance Infrastructure, Gas Authority of India Ltd and Hero Motor Corp.
Asian markets also ended higher with the Japanese Nikkei, Hong Kong's Hang Sang, Korean Kospi and Taiwan's Taiwan Weighted all gaining more than 1% each.
Today's decision by the German Constitutional Court is likely may spark a fresh rally in stocks. All eyes would now be focused on Federal Reserve Chairman Ben Bernanke, who is likely to hold a press conference after a two day meeting of the Federal Reserve Open Market Committee meet. Should the Federal Reserve Chairman unveil quantitative easing plan it could spark a fresh rally in stocks.