Asian stocks were mostly higher on Thursday after the Federal Reserve unveiled a cut in monetary stimulus but vowed to keep interest rates low. However, Chinese shares underperformed on fears of tight liquidity.
In one of the most closely-watched central bank meetings of the year, the Fed announced Wednesday it would start to taper its aggressive bond-buying program to $75 billion a month in January. However, the main focal point for investors was the Fed's statement that it would keep overnight rates near zero "well past the time" unemployment falls below 6.5 percent.
(Read more: Is this the 'lion in the grass' for the Fed?)
Nikkei 1.7% higher
Mitsubishi UFJ increased 1.7 percent after acquiring a 72 percent stake in Thailand's Bank of Ayudhya for $5.31 billion.
The Bank of Japan is in focus as it kicks off a two-day policy meeting later in the day. Analysts do not expect any major changes but there is talk that Prime Minister Shinzo Abe may unveil details of key structural reforms ahead of scheduled speech later in the day.
Emerging markets mixed
Indian shares fell nearly 1 percent while Indonesia's benchmark Jakarta Composite jumped 1 percent. Philippine shares ended modestly higher.
In the currency space, the rupiah hit a five-year low against the greenback at 1,290 while the ringgit and Philippine peso hit their lowest level in three months. The rupee was modestly lower at 62.4 per dollar.
(Read more: Ding ding: Taper tantrum round two? )
Sydney rallies 2%
Oil firm Caltex soared 13 percent despite forecasting a 30 percent fall in annual profits. But analysts say investors cheered an increase in earnings at its fuel marketing business.
Shanghai 1% lower
The mainland's benchmark Shanghai Composite index closed at a new one-month low for a third straight session on a spike in money market rates. The People's Bank of China (PBOC) skipped open market operations on Thursday for a fifth session and that saw the seven-day repo rate hit its highest level since June for a second straight session.
(Read more: Marching higher once more: China's cash rates)
"The PBOC has sat out of the market and is currently undergoing early stages of liberalization of the markets. With that in mind then perhaps the current levels aren't too alarming and the PBOC could easily step in should the situation get out of hand," said Stan Shamu, market strategist at IG.
Financials led the declines with Hua Xia Bank skidding 3.3 percent and Minsheng Bank declining 2.8 percent.
South Korean shares pared gains to hover at the flat line after opening at one-week highs.
Steep declines in automakers were to blame as Hyundai Motor and Kia Motor slumped 3.7 and 1 percent, respectively, after the Supreme Court ruled that fixed bonuses should be included in regular wage calculation.
Meanwhile, the won fell to a more than two-week low at 1,062 per dollar after policymakers promised to take action if needed to calm markets following the Fed's decision.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter