Mumbai: India's barometer stock indices, Sensex and Nifty, rose over 1 per cent each on Thursday, as bets that the US Federal reserve will slow its pace of rate tightening and lower oil prices burnished the appeal for equities.
The Fed's rate-raising spree had triggered a rush of capital outflows, pressuring the rupee and depressing equities as well as sovereign debt.
However, the oil price crash and the Fed's recent dovish stance on rates have boosted the rupee, renewing foreign investor interest in Indian financial markets.
The gains, the fourth in a row, were also triggered by short covering ahead of the monthly derivatives expiry on Thursday.
On Thursday, the Indian rupee gained 78 paise to close at Rs 69.84 from its previous close of Rs 70.62.
The S&P BSE Sensex settled 453.46 points up or 1.27 per cent at 36,170.41, from its previous close of 35,716.95. It touched an intra-day high of 36,253.85 and a low of 35,946.24.
The NSE Nifty50 gained 129.85 points or 1.21 per cent to finish at 10,858.70.
"The gains came on the back of a rally in global equity markets after a dovish comment by US Federal Reserve Chairman Jerome Powell pushed up appetite for risk assets. Sentiments were also boosted by a fall in crude oil prices and a firm rupee," said Deepak Jasani, Retail Research Head, HDFC Securities.
"Broad market indices like the BSE Mid-cap and Small-cap gained less, underperforming the main indices."
The Brent crude oil price declined to $57.94 a barrel.
The financials, which led the gains, were up over 1.5 per cent while selling pressure was witnessed in the export-dependent IT stocks as the rupee strengthened.
Vinod Nair, Head of Research, Geojit Financial Services, said: "Market held on to its strong gap-up momentum fuelled by the US Fed's dovish tone on interest rate cycle coupled with a fall in US bond yield to 2.99."
"Tailwinds in domestic macros led by a sharp fall in oil prices and a strong rupee supported the trend. Any ease in global trade tension after the G20 meet this weekend will also boost global sentiment."
The provisional data with the exchanges showed that foreign institutional investors pumped in Rs 823.47 crore on Thursday while the domestic institutional investors bought shares worth Rs 973.31-crore.
Top gainers on the Sensex were Bajaj Auto, up 4.68 per cent at Rs 2,725.05; Kotak Mahindra Bank, up 4.24 per cent at Rs 1,210.15; Mahindra and Mahindra, up 3.31 per cent at Rs 773.10; Vedanta, up 3.19 per cent at Rs 199.10; and IndusInd Bank, up 2.83 per cent at Rs 1,659.75 apiece.
The top laggards were Power Grid, down 1.55 per cent at Rs 181.20, ONGC, down 1.33 per cent at Rs 140.75; Infosys, down 1.01 per cent at Rs 659.60; Tata Consultancy Services, down 0.87 per cent at Rs 1,959.45; and NTPC, down 0.84 per cent at Rs 1142.30 per share.