Indian equity shares rose nearly 1.6 per cent as the US Federal Reserve said it would take a "patient" approach in deciding when to raise the interest rates.
Also, covering-up of pending short positions propped up the domestic sentiment.
The Reserve Bank of India Governor, Raghuram Rajan, had called the prospect of US rate hikes a risk to emerging markets given expectations that overseas investors may pare their bets on higher-yielding debt of countries such as India.
The BSE benchmark Sensex surged 416.44 points to end at 27,126.57 and the NSE index Nifty gained 129.50 points to end at 8,159.30.
Market up and running again after FOMC adds the word "patient" with "considerable time". But Yellen says Fed's patience has limits.
— lokeshwarri sk (@lokeshwarri)
Sectoral indices
All BSE sectoral indices ended significantly in the green with consumer durables, power, India infrastructure and capital goods indices driving the uptrend. Among them, consumer durables was up 5.26 per cent, followed by power 3.26 per cent, India infrastructure 3.18 per cent and capital goods 2.78 per cent.
Gainers, losers
Major gainers were BHEL (4.91%), Hindalco (4.31%), GAIL (4.19%), Maruti (3.91%) and NTPC (3.83%) while the only three Sensex losers were M&M (0.46%), Dr Reddy's (0.31%) and HUL (0.05%).
Sensex makes a gap up opening following surge in teh US and other markets yesterday....optimism from Fed's promise of "patience" on rates
— Rajalakshmi Nirmal (@crajalakshmic)
December 18, 2014Early trade
Short-covering saw the Nifty and the Sensex bounce back on Thursday. The Nifty opened 109 points up at 8,139, while the Sensex opened 344 points up at 2,7054.
The US dollar corrected against major currencies after the US Federal Reserve decided to hold interest rates as of now. The Federal Open Market Committee said in a statement: "To support continued progress towards maximum employment and price stability, the committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the committee will assess progress -- both realised and expected -- towards its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. Based on its current assessment, the committee judges that it can be patient in beginning to normalize the stance of monetary policy.''
Indian shares and bonds also benefited as Russia's rouble stabilised after dramatic falls this week, reducing some of the fears of financial contagion to emerging markets.
Funny how the ongoing turbulence, Russia et al was left out of FOMC statement. How is the US hoping to survive if all the rest collapse?
— lokeshwarri sk (@lokeshwarri)
December 18, 2014European markets
European stocks rose early on Thursday, tracking a rally on Wall Street after the US Federal Reserve gave an upbeat assessment of the economy and said it would take a patient approach towards raising interest rates.
Asian markets
Asian share markets rallied on Thursday after US stocks enjoyed their strongest session this year when the Federal Reserve sounded upbeat on the economy and promised to be patient in removing policy stimulus.
US stocks
US stock averages posted their best day this year and the dollar strengthened on Wednesday after the Federal Reserve signalled America’s economy was strong enough to handle interest rate hikes in 2015, though it emphasised that shifts in policy would be gradual.