Nifty ended at an all-time high to close at 9,153.70. Sensex rose about 217 points in early trade but finished 188 points up to close at 29,585.85.
On Wednesday night, the US Fed raised interest rates by 25 basis points to a range of 0.75 percent to 1.00 percent. This was the second time in three months that the Fed had increased the interest rate.
Post the rate hike, the dollar weakened against major currencies across the world. This in turn led to the rally of metal and oil stocks in India. Adani Ports zoomed 4.7% followed by Tata Steel which ended 4.3% higher.
Following the US markets, the Asian markets also made big gains.
This is the second hike by the US Fed in less than three months, but the third one in over ten years.
The Fed’s move to hike rates was a surprise one as the Fed’s policy-setting committee had not flagged any plan to accelerate the pace of monetary tightening.
In its policy statement post the hike, the Fed clarified that further rate increases would only be “gradual”, contrary to what the market was expecting.
Business investment “appears to have firmed somewhat,” the Fed said in language that reflected a stronger sense of the economy’s momentum.
Stock markets extended their gains and bond yields fell on the benign economic outlook and the continued steady path of interest rate rises signaled by the central bank.
The Fed’s projections showed the economy growing by 2.1 percent in 2017, unchanged from the December forecast.
The rate increase comes amid a broad improvement in the world economic outlook and a sense among Fed policymakers that the U.S. economy is close to the central bank’s employment and inflation goals.
(With inputs from agencies)