Equity benchmark Sensex jumped nearly 850 points in early trade on Thursday, following a strong rally in global equities after the US Fed raised interest rates.
Besides, fresh foreign inflows and softening crude oil prices also helped the domestic equity markets, traders said.
The 30-share Sensex was trading 846.31 points or 1.49% higher at 57,662.96 and Nifty was trading 236.80 points or 1.39% higher at 17,212.15.
All components of the Sensex remained in the green. HDFC was the top gainer in the Sensex pack, rising 3.14%, followed by Axis Bank, Asian Paints, Kotak Bank, IndusInd Bank, HDFC Bank, ICICI Bank and Bajaj Finance.
In the previous session, the 30-share index had closed 1,039.80 points or 1.86% higher at 56,816.65. Similarly, the broader NSE Nifty jumped 312.35 points or 1.87% to 16,975.35.
Borrowers in Hong Kong, Seoul and Tokyo rallied in mid-session deals, while Shanghai was in the red.
Stock exchanges in the US closed with significant gains in the overnight session after the US Federal Reserve raised interest rates, marking the first hike since 2018. The Fed also indicated that more hikes would be needed to fight inflation.
The US central bank on Wednesday approved a 0.25 per cent hike in interest rates.
International oil benchmark Brent crude rose 0.86% to $98.86 a barrel.
“The 25 bp hike in rates by the Fed was in line with market expectations. The Fed’s forecast of another six hikes this year is bullish and, therefore, the smart rally in the markets with the S&P 500 and Nasdaq up 2.24 per cent and 3.17 per cent respectively. A bit unexpected,” said VK Vijayakumar, chief investment strategist, Geojit Financial Services.
Mr Vijayakumar said there was oversold in the market and consequently short-covering pushed the indices higher. Markets reassured Fed chief Powell’s statement that “the US economy is very strong and well positioned to handle tighter monetary policy”.
He further said that short covering in India will also give rise to the market on Thursday.
“Over a long period of time, FPIs becoming buyers and softening crude oil will support the market. Financial conditions are likely to improve, especially in high-quality private banks where FPIs were frequent sellers,” he added.
Foreign institutional investors emerged as net buyers after buying shares worth Rs 311.99 crore on Wednesday, according to exchange data.
Meanwhile, Russian military continued strikes against Ukraine on Wednesday, even as the two countries expressed optimism over efforts to negotiate a resolution to end the conflict.