Indian markets surged for the seventh out of the last eight sessions, shrugging off the Fed rate hike, led by gains in global equities. China's pledge to support its markets, progress of Russia-Ukraine peace talks and the US Fed comments on the economy also boosted sentiments.
The Sensex rose 1.82 percent or 1,033 points to 57,875 points, while the Nifty gained 1.8 percent or 302 points to 17,276 points. Since 7 March, Both the Sensex and the Nifty advanced around 9 percent each.
Among other global markets, Heng Seng advanced 4 percent, Nikkei 3 percent, Kospi 1.8 percent, Australia's ASX 200 1.4 percent and Shanghai rose 1.2 percent.
Let's look at the factors behind the market rally.
Fed rate hike: The US Fed hiked rates by 25 basis points largely in line with analysts' expectations. The Fed also signalled hikes at all six remaining meetings this year. Global markets rose after the Federal Reserve’s view that the US economy is strong enough to weather the campaign against high inflation now underway. Chair Jerome Powell said the US economy is very strong and can handle monetary tightening.
"The Fed raising rates by 25 bp was in line with market expectations. The Fed's projections of another six hikes this year is hawkish and, therefore, the smart rally in markets with S&P 500 and Nasdaq posting 2.24 percent and 3.7 percent up moves respectively was a bit unexpected. The explanation is that the market was oversold and the consequent short-covering pushed the indices higher. The market drew confidence from the Fed chief Powel's statement that "the American economy is very strong and well positioned to handle tighter monetary policy", said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Crude oil prices: International crude was trading below $100 a barrel after Ukraine and Russia reached a tentative peace plan to end the war that was in its third week, The Kyiv Independent reported. It further said the deal included a ceasefire and withdrawal of Russian troops if Kyiv renounced its ambitions for a membership of the North Atlantic Treaty Organisation (NATO) and accepted limits on its armed forces. On March 7, Brent had touched $139.13 per barrel, the highest since 2008.
China support: Global markets also rose after the Chinese authorities pledged to provide support and stability to the country's troubled markets. A report by the official Xinhua news agency said China will keep the stock market stable and support overseas share listings. The report, which cited a meeting chaired by Vice-Premier Liu He, came after a series of pieces in state media looking to boost sentiment.
RBI policy: The Reserve Bank of India is expected to thrash out a policy supportive of economic growth, analysts expect. The RBI is likely to keep its repo rate on hold at 4 percent and maintain its accommodative stance at its April policy review. The CPI breached the RBI's 6 percent upper tolerance level in February. Analysts say the RBI will look through any inflationary supply shocks in the near term and sustain a dovish pause to support a durable recovery.
FII buying: After selling a record Rs 2.3 trillion in Indian equity markets since October, foreign investors bought for the first time on Wednesday. They bought Rs 311 crore, data available with NSE.
(Bloomberg contributed this story)
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
