However, the index pared earlier losses and managed to finish higher after moving in and out of negative territory.

Wrapping up their two-day policy meeting, the central bank said it is "closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook."

"Investors failed to hear what they wanted to hear from the Fed as it implied that it is needed to closely monitor the global economic and financial situations as they would put outlook at risk," said Bae Sung-young, an expert at Hyundai Securities. 

"But it had a limited impact on the local market as local shares have already been oversold. Rising oil prices and the stable Chinese market would also draw investors back," he added.

Institutions scooped up a net 109.2 billion won, while individuals dumped a net 102.91 billion won in shares. Overseas investors were also net sellers by shedding a net 22.82 billion won after the one-day buying mode in the previous session following its record 37-session selling spree that had weighed down the index.

Financials were among the best performers.

Samsung Life Insurance spiked 11.51 percent to 109,500 won after some local media reported that it will purchase Samsung Electronics's entire stake in Samsung Card as part of the conglomerate's ongoing move to streamline ownership. Samsung Card also surged 10.41 percent to 35,000 won.

But Samsung Electronics tumbled 2.55 percent to 1,145,000 won, after it reported a sharp drop in fourth-quarter profits due to sluggish smartphone and chip sales.

Construction and steel shares helped the market's upturn thanks to the rise in global oil prices.

Hyundai Construction surged 4.6 percent to 36,350 won, and Daelim Industrial jumped 3.98 percent to 78,400 won. Top steelmaker POSCO also added 1.16 percent to 174,500 won.   

The local currency ended at 1,208.5 won against the greenback, down 6.5 won from Wednesday's close. (Yonhap)