Tracking upbeat global and domestic cues after the US Federal Reserve left interest rates unchanged and the current account deficit of the country declined for the first quarter, the Sensex rallied by 266 points to close at a two-week high of 28,773.13 and the NSE Nifty went past the 8,800-mark.
On the other hand, the rupee soared by 36 paise, its biggest single-day gain in four months, to close at two-week high 66.66 a dollar on easing worries of foreign fund outflows. The sentiment turned highly buoyant after the US Federal Reserve expectedly left the policy rate unchanged.
Trading sentiment got a boost after the current account deficit narrowed sharply to just $ 300 million, or 0.1 per cent of GDP in the June quarter, driven by lower trade deficit on deeper import contraction.
The rally in domestic equities was largely in line with the upmove seen in global stocks driven by the US Federal Reserve’s decision not to lift interest rates.
However, select software exporter stocks, like TCS and Wipro, saw selling pressure following weakness in the dollar against the rupee. Software exporters’ almost 60 per cent revenue comes from the US and European markets.
“Markets praised Fed’s decision as the global bond yield reverted and rupee strengthened. Due to a neutral statement, the market believe that the risk for December 16 rate hike is roughly balanced adding positive sentiment,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
The 30-share Sensex after scaling the day’s high of 28,871.92, closed 265.71 points or 0.93 per cent higher at 28,773.13, a level last seen on September 9, when it had closed at 28,797.25.
The 50-share NSE Nifty reclaimed the key 8,800-mark to hit a high of 8,893.35 before winding up at 8,867.45 points, up by 90.30 points, or 1.03 per cent.
Broader markets too displayed a bullish trend with mid-cap and small-cap indices rising 1.39 per cent and 1 per cent, respectively, as investors widened their portfolios.
Emerging market currencies also rallied against the US dollar after the Fed decision. Bank of Japan (BoJ) on Wednesday kept interest rates on hold at minus 0.1 per cent in an overhaul of its massive stimulus programme.