The 30-share Sensex ended up 85 points at 18,902 and the 50-share Nifty ended up 36 points at 5,760.
In the broader markets, the midcap and the smallcap advanced 0.7-0.8% outperforming the BSE benchmark index, up 0.4%.
Barack Obama won a second term as the President of the United States after defeating Republican challenger Mitt Romney in a closely fought battle. Overcoming what appeared to be a cliff-hanger, Obama finally managed to emerge winner after a convincing victory in the crucial state of California.
According to Sonal Varma, India economist at Nomura, "We expect some moderation in US growth next year.
For India, the outcome is broadly status quo as regards the key policies.
As regards bond yields, our house view is that we are bullish on bonds and expect the 10-year bond yields rally to 7.80 levels by March 2013, mainly because of domestic factors like open market operations continuing."
Meanwhile, the rupee advanced further by 46 paise to 53.97 against the US currency on selling of dollars by banks and exporters after the greenback weakened against against major world currencies.
European stocks rallied early on Wednesday as the re-election of US President Barack Obama fuelled expectation the Federal Reserve's quantitative easing will continue. CAC, DAX and FTSE stepped up 0.5-1%.
Asian markets were also in the green.
The Hang Seng,Taiwan Weighted, Kospi and Straits Times also moved up 0.5-0.8% each. Shanghai Composite, and Nikkei were the only markets flat with a negative bias.
Back home, among the sectoral indices, Realty up nearly 3% was the top gainer followed by Bankex, IT and Auto gaining 0.6-1%.
Meanwhile, Oil & Gas closed in the negative, down 0.3%.
The movers among the Sensex-30 were HDFC, SBI, BHEL, Hindalco, ICICI Bank, Maruti Suzuki, Tata Motors, NTPC and Tata Steel added between 1-2%.
The only losers were Tata Power, Bharti Airtel, Coal India, Cipla, ONGC and Reliance Industries down 0.2-2%
In individual stocks, Britannia Industries was trading lower by 2% at Rs 470 after reporting a lower than expected 21% year-on-year growth in net profit at Rs 46 crore for the second quarter ended September 2012.
Aarvee Denims and Exports was locked in 10% upper circuit at Rs 72.60 after reporting almost five-fold surge in net profit at Rs 17.29 crore for the second quarter ended September 2012
on back of higher sales and lower raw material cost.
The textiles company had a profit of Rs 3.75 crore in the year ago quarter.
Cochin Minerals and Rutile rallied 9% to Rs 278, extending its 9% gain in past two trading sessions, after reporting over two-fold jump in net profit at Rs 20.96 crore in September 2012 quarter, on the back of higher sales.
Apollo Hospitals Enterprises jumped 7.5% to Rs 880, extending its past two days 7% gain, on reports of the country's leading hospital chain is planning expansion plan of Rs 2,000 crore.
Pantaloon Retail (India) wass trading higher by 3.5% to Rs 200 on reports that L&T Finance Holdings is close to buying out the company's stake in the general insurance joint venture Future Generali India Insurance Company.
Reliance Capital was trading higher by 3% at Rs 407 on reporting twelve-fold increase in its consolidated net profit at Rs 401 crore for the September quarter on back of one time gain on stake sale in its asset management company and growth in commercial finance business.
The company had profit of Rs 33 crore in previous year quarter.
The market breadth was positive.
About 1672 stocks advanced while 1205 stocks declined on the BSE.