The 30-share S&P BSE Sensex ended up 130 points at 25,400 and the Nifty50 rose 46 points to close at 7,759.
The dollar gained against other currencies overseas.
President Donald Trump has tapped Jerome "Jay" Powell to lead the US central bank, bypassing Janet Yellen for a second term despite praising her excellent management of the world's largest economy over the past four years.
Foreign fund inflows and a higher opening in the domestic equity market supported the domestic unit
Gold prices staged a smart rebound to surpass the psychologically important Rs 28,000 milestone.
Decline in the rupee coupled with a slide in the crude oil prices have dented the sentiments.
Strong currency and sagging oil prices are spooking policymakers.
The rupee had gained 24 paise to close at nearly one-week high of 60.95 against the dollar yesterday following selling of the US currency by exporters and some banks, amid sustained heavy capital inflows.
Demand bounces back but uncertainty over GST rate for jewellery casts a shadow over future.
India is better prepared to deal with any further US Fed tapering, but the country needs to remain vigilant to face eventualities, Reserve Bank Governor Raghuram Rajan said.
This was the biggest single-day fall for the benchmark index since August 10 when it had fallen by 310 points.
Fed policymakers' deepening uncertainty about their own projections has resulted in the central bank sending mixed messages
Chanda Kochhar is among the three Indians in Time's Most Influential list.
This was the near-unanimous replies of 10 market participants.
ICICI Bank and SBI were among the top Sensex gainers along with FMCG majors ITC and HUL.
Reserve Bank of India Governor Raghuram Rajan took charge of India's central bank when the rupee seemed to be in a tailspin while the country was facing runaway inflation.
The Sensex ended in red on domestic concerns.
Weakness in dollar in the overseas market also boosted the rupee value
The rupee had slumped to its all-time closing low of 68.80 a dollar on August 28, 2013.
Hawkish guidance by the US Fed raises concerns it could tie the hands of RBI from trimming rates.
Fed keeps rates unchanged, sets up possible December hike
In the United States, economic data is likely to take a back seat next week.
Fed seen holding rates steady as investor confidence shakes
Though the markets have lost ground since the past few sessions, analysts do not seem worried.
Experts advise investors to buy at lower levels in the next few months and sell at the higher end of their range in the second half, reports Rajesh Bhayani.
UltraTech Cement was the top gainer in the Sensex pack, rising 3.06 per cent, followed by IndusInd Bank, ICICI Bank, HDFC Bank, Titan, Axis Bank, SBI and Reliance Industries. NSE Nifty advanced 78.35 pointsto close at 14,814.75.
The rupee had strengthened by 19 paise on Monday.
A massive rally in domestic equities along with smooth supply of dollars on the back sustained capital inflows into equities and debt predominantly helped the upmove
RBI is committed to bringing down retail inflation to eight per cent by January 2015 and six per cent by January 2016.
In the longest losing streak of 2017, the BSE Sensex has lost 1,270 points, or 3.91 per cent. It fell to a three-month low of 31,154.03 on Wednesday.
At the same time, however, officials at the central bank lowered their projections for the long-run target interest rate, evidence of slightly diminished expectations for a nation climbing out of a severe crisis and struggling with demographic headwinds like declining labor force participation.
The S&P and Dow dipped the most in a day since September 28.
The central bank maintained its bias towards a rate hike.
Summers dogged by controversies over past views
Markets ended higher, amid firm global cues, and are on track for third straight day of gains.
US job growth increased at a fairly brisk clip in October and the unemployment rate fell to a fresh six-year low of 5.8 per cent, underscoring the economy's resilience in the face of slowing global demand.
Biden, 'plotting an ambitious presidency that would begin amid twin health and economic crises, is leaning on veteran advisers with high-level governmental experience rather than outsiders and ideological rivals to help guide him on subjects including the coronavirus pandemic and the country's diminished standing in the world', a report in The New York Times said.
S&P BSE Midcap shed 0.8% while S&P BSE Smallcap tumbled 0.6%
Devangshu Datta predicts the good, the bad and the ugly of currency trends for the coming year.
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