Benchmark indices ended the day higher ahead of a key decision by the US Federal Reserve, which will decide on raising interest rates for the first time since June 2006.
Most Asian markets rallied, while European markets were trading higher ahead of the decision, where it is widely expected that the US Fed would raise interest rates by 25 basis points.
The Sensex ended the day with gains of 173 points, while the Nifty rallied 49 points in trade. Banking stocks finally made a comeback with ICICI Bank gaining 2 per cent, while other notable winners were Yes Bank and IndusInd Bank. PSU Banking stocks also saw some buying interest with State Bank and Canara Bank among the gainers.
Shares in Mahindra and Mahindra fell more than 4 per cent after the ban on diesel vehicles with more than 2000 cc in Delhi.
Infosys saw good buying support after the company said that Hong Kong's Fubon Bank has selected Finacle as its core banking platform. Mid cap stocks also had a good session with IGL jumping 6%, while JSW Energy gained 4%.
Wipro on the other hand dropped after reports that rains in Chennai will affect the company's Q3 revenues. Meanwhile, markets across Asia ended sharply higher, while most of Europe was trading with marginal gains.