Markets gain on dovish comments by US Fed chairman; Sensex rise 378 points

Bank Nifty underperforms after RBI raises hikes rate by 25bps

Benchmark Nifty gained nearly 0.9 per cent on Wednesday amid a rally in global equities following dovish comments by the Federal Reserve Chairman. Also, gains in Adani group stocks propelled the 50-share index.

The banking pack, however, underperformed with gains of just 0.1 per cent after the Reserve Bank of India (RBI) hiked policy rates by by 25 basis points (bps) to 6.5 per cent.

The Sensex rose 378 points, or 0.6 per cent, to end the session at 60,664. The Nifty finished at 17,872, a gain of 150 points, or 0.9 points. The Bank Nifty index rose just 0.11 per cent to close at 41,538.

Sentiment towards risky assets improved after Fed chairman Jerome Powell said disinflation has begun and there could be a significant reduction in price rises this year. Powell's comments were perceived as dovish by equity investors who took it as a cue for going soft on monetary tightening. Powell however reiterated that further hikes will likely be needed if the jobs market remains strong.

Market players said while RBI hiked rates for a sixth time the announcement was on the expected lines.

"Since there were no surprises in the RBI's MPC meet and the 25 bps rate hike was in line with expectations, investors resorted to buying in IT, banking & other select front liners. Also, strong US market cues in overnight trades had boosted market sentiment," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

Foreign Portfolio Investors were net sellers to the tune of Rs 737 crore, according to provisional data from exchanges. Reliance Industries rose 2 per cent and contributed the most to Sensex gains. Infosys rose 1.7 per cent and Bajaj Finance by 3.1 per cent.

Technical analysts said the Nifty could once again head towards the 18,000-mark.

"Over the near term, the trend may remain positive, with the potential to reach towards 18,000; again, a decisive breakout above the 18,000 level may induce a rally towards 18,350-18,400. On the lower end, support is visible at 17,650," said  Rupak De, Senior Technical Analyst at LKP Securities.