The US central bank left interest rates unchanged but opened the door for a possible rate cut in the future.
The S&P BSE Sensex jumped 488.89 points higher to finish at 39,601.63. The Nifty closed 140 points in the green, at 11,831.75.
"The status quo on rates ensures that the key rate remains in the range of 2.25-2.50 per cent range. Fed Chair, Jerome Powell's statements can be construed to mean that the Fed remains willing to cut rates in future," said Jaikishan Parmar, Senoir Equity Research Analyst, BFSI, Angel Broking.
"Wall Street was not too impressed by the shift in language and would have rather preferred an outright rate cut. While US markets were mildly in the positive, markets across Asia have certainly celebrated the decision," he added.
Jet Airways scrips advanced by massive 93 per cent to close at Rs 64 a piece ahead of National Company Law Tribunal's (NCLT) order on whether the bankruptcy case will be admitted.
The SBI-led lenders consortium earlier this week took the grounded airline to the NCLT for the speedy recovery of their dues.
The heavily beaten down Yes Bank counter reversed its negative trend to close over 10 per cent higher.
The private lender was followed by healthcare major Sun Pharma, which surged over 4 per cent.
IndusInd Bank, Larsen and Toubro, ICICI bank were the other top gainers.
( With inputs from IANS )