The National Stock Exchange of India (NSE) and the BSE will remain closed on January 26 on account of Republic Day.
Wholesale commodity markets, including metal and bullion, will also remain shut. There will be no trading activity in the forex and commodity futures markets either.
On January 25, the Sensex was up 366.64 points, or 0.64 percent, at 57,858.15, and the Nifty was up 128.90 points, or 0.75 percent, at 17,278
Maruti Suzuki, Axis Bank, SBI, IndusInd Bank and UPL were the top Nifty gainers, while losers included Wipro, Bajaj Finserv, Titan Company, Infosys and Tech Mahindra.
Except IT, all other sectoral indices ended in the green, with Nifty PSU bank, FMCG, auto and bank rising 1-4 percent.
The broader indices outperformed the main indices. The BSE midcap index gained a percent, while the smallcap index closed 0.81 percent higher.
"Markets took a breather and gained over half a percent, tracking firm recovery in the US markets and upbeat earnings. Initially, the benchmark remained volatile, however healthy buying in select index majors from banking, auto and telecom space helped the index to gradually inch higher as the day progressed," said Ajit Mishra, VP - Research, Religare Broking.
"Markets will react to the Fed meeting outcome in early trade on Thursday and we expect volatility to remain high, thanks to the scheduled monthly expiry. Keeping in mind the scenario, we reiterate our cautious view and suggest preferring hedged positions," Mishra added.
Indian rupee ended 21 paise lower at 74.77 per dollar on Tuesday against Monday's close of 74.56.
"Going into the US Fed meeting, traders are cautious and due to that they have pushed implied volatility of USDINR options higher. The near-term direction will be dependent on how hawkish the US Fed will be Wednesday evening," said Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities."With much hawkishness being priced in, the US Fed has to announce a sudden stop to asset purchases to deliver a hawkish surprise. Therefore, volatility can increase over the remainder of the week. We expect a wide range of 74.45 and 75.00 on spot, with a slightly upward bias," he added.