The S&P BSE Sensex closed at 29,648.99, up 63.14 points while the Nifty50 closed 9,160.05, up 6.35 points.
The benchmark indices opened on a high note but slowly lost pace by midday.
However, the Nifty hit a fresh high at 9,200 briefly in the morning hours.
The BSE Sensex also touched a 2-year high after shares of ITC spiked as much as 7.4 per cent - its biggest gain since May 2016.
The cigarette making company welcomed the government's decision of not increasing tax rates.
Shares of ITC gain 7.11 per cent on the BSE.
Among the laggards are Bharti Airtel, GAIL and Sun Pharma that fell over 1 per cent on the BSE.
Meanwhile, Radio City's owner and operator, Music Broadcast lists at Rs 420 and is up over 26 per cent over its issue price.
The company saw a spectacular debut as its shares got losted at a 26.13 per cent premium on BSE at Rs 420 compared with an issue price of Rs 333.
Reversing its 4-day climb, the rupee fell 24 paise to 65.65 against the dollar today as the American currency got some of its lure back among banks and importers.
The dollar's strength overseas weighed, but a higher opening in domestic equities cushioned the impact.
The rupee had gained 28 paise to close at a fresh 16-month high of 65.41 yesterday after the US Fed stuck to its stance of a gradual approach on future rate hikes.
The shares of ITC continue to gain over 5 per cent and contributed nearly 1/3rd to the Nifty gains
FMCG stocks buzz in trade today.
The Indian benchmark indices opened on a higher note with the Nifty hitting over 9,200-mark for the first time.
At 9.22 AM, the S&P BSE Sensex was trading at 29,678.25, up 92.40 points while the Nifty50 was ruling at 9,171.85, up 18.15 points.
The top performer on the bourses was ITC which surged over 5 per cent, followed by Adani Ports, Tata Steel, Wipro and Lupin.
Aviation stocks gain:
Jet Airways, up 3.54 per cet
Indigo, up 1.92 per cent
SpiceJet, up 2.62 per cent
"Going forward, we would expect this optimism to continue in the market and expect the Nifty to keep marching higher, first towards 9200 and then towards our near term target of 9400 - 9600 (price extension of previous up move from recent low of 7893.80) over the next few weeks. On the downside, yesterday's gap area of 9107 - 9129 would act as a strong support zone," said an Angel Broking report.
PRE MARKET OPENING
The Indian markets look to begin on a positive note.
Sensex quoted 169 points in pre opening session while Nifty50 was pegged around 54 points.
Stocks that are leading in the pre open are ITC, TCS, WIPRO and CIPLA.
Asian stocks rose higher in early trade on Friday, set for its best week since September, while the dollar continued the slide that began after the US Federal Reserve indicated it was unlikely to speed up monetary tightening.
The dollar index, which tracks the greenback against a basket of six trade-weighted peers, retreated 0.1 per cent to 100.26. It hit a five-week low on Thursday, and is down almost 1 percent for the week.
The dollar was steady at 113.32 yen but is on track to post a 1.2 per cent loss for the week.
The euro touched its highest level in 5-1/2-weeks on Friday. It was fractionally higher at $1.07715 in early trade, after two days of strong gains, and set to end the week up 0.9 percent.
Sterling inched lower to $1.235 early on Friday. On Thursday, it jumped to a two-week high after a decision by the Bank of England to hold interest rates steady, while hinting it might raise them soon.
While the Fed raised interest rates by 25 basis points on Wednesday, it kept to its original forecast of three rate hikes this year, disappointing investors who were expecting four.
Wall Street: Overnight, Wall Street was subdued following strong gains after the Fed's rate decision. The Nasdaq was flat, while the Dow Jones and the S&P 500 posted losses.
Asian Markets: China's Shanghai Composite Index was trading 0.26 per cent lower, Hong Kong's Hang Seng Index was rose 65 points higher while Japan's Nikkei was down 66 points.
(With inputs from Reuters)