With this, the 30-share index extended its winning run to the sixth straight day after gaining 386 points in last five trading sessions.
The Sensex opened lower but picked up pace to touch the day's high of 18,973.43, up 156 points, on expectations that Obama's second term will help uplift business sentiment and lead to economic resurgence in America.
Finance Minister P Chidambaram today expressed the hope that economic ties with the United States would improve with the re-election of Barack Obama as the US President.
"I congratulate President Obama. I hope that Indo-US relations (will) get stronger...Especially economic relations", he told reporters in New Delhi.
After witnessing some profit-booking in late trades, the Sensex closed with a gain of 85.03 points , or 0.45 per cent, at 18,902.41 -- a level closer to 18,938.46 seen on October 5.
"With the re-election of Obama as US President, the period of uncertainty and anxiety on this issue has ended. The gains in Indian stock indices is a reflection of the optimism that quantitative easing measures would continue under Obama's regime," said Amar Ambani, Head of Research, IIFL.
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The NSE 50-share Nifty also firmed up by 35.70 points or 0.62 per cent to 5,760.10. The market breadth was positive as 1,672 shares finished higher while 1,205 scrips ended lower.
Information technology stocks, including Infosys and TCS, closed with gains. The Indian software companies get over 50 per cent revenue from the US and European markets.
Today's rise was also on the back of stocks from realty and banking space, including SBI, HDFC and ICICI Bank.
However, Bharti Airtel shares ended nearly 1 per cent lower after reporting 11th consecutive quarter of profit dip.
With reports trickling in about the outcome of US Presidential polls, most Asian indices ended in positive zone. European markets after opening higher, were trading up 0.3-0.8 per cent range in afternoon trade. (MORE)