The Sensex, shrugged off global cues and opened on a firm note.
The index touched a high of 17,135 and finally ended up 354 points, or 2%, at 17,099.
Nifty crossed the 5,100 mark and ended up 108 points at 5,140.
In Europe, bourses opened in the red but managed to recover. The DAX jumped 1.2% to 5,481.
CAC and FTSE have gone up 0.5% each.
Asian markets ended in green with Hang Seng and Shanghai Composite gaining 0.5% each. Nikkei caught up with Monday's losses and ended down 1.6% at 8,721.
"Markets will await announcements from global developments such as the 2-day Federal Reserve meeting.
Any announcement on QE3 -- quantitative easing, or a similar economy boosting measure would lead to buying action in the equity markets.
However, a failure to do so and brewing worries in the Euro-zone could take equities further down," said Amit Chheda, Head Equity, Inventure Growth and Securities.
BSE IT index has jumped 3.2% to 5,218 on a declining rupee. Indian rupee fell to Rs 48.23, its weakest level in two years today.
A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a majority share of revenue from exports.
Wipro added 2.7% at Rs 351. TCS and Infosys added 3-4% each.
The company is reportedly close to acquiring the health care business of Thomson Reuters in a $700-750
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