Indian shares jumped 1.8 per cent on Wednesday and posted their biggest single-day percentage rise in about a month, tracking gains throughout Asia after Federal Reserve Chair Janet Yellen called for caution when raising US interest rates.

In a speech on Tuesday, Yellen also said inflation has not yet proven durable against the backdrop of looming global risks to the US economy, in her first comments since the Fed held rates steady two weeks ago.

Besides, hopes of a rate cut by the RBI at its monetary policy review on April 5 accelerated buying activity.

The 30-share BSE index Sensex surged 438.12 points or 1.76 per cent to 25,338.58 and the 50-share NSE index Nifty jumped 138.2 points or 1.82 per cent at 7,735.20.

Among BSE sectoral indices, realty index gained the most by 3.85 per cent, followed by banking 3.13 per cent, metal 3.06 per cent and capital goods 2.73 per cent.

Top five Sensex gainers were Tata Steel (+6.75%), ICICI Bank (+6.31%), Lupin (+5.21%), Tata Motors (+4.32%) and State Bank of India (+4.25%), while the major losers were HDFC (-1.08%), M&M (-0.98%), Bharti Airtel (-0.2%), and Maruti (-0.08%).

A report by SMC Global said: "US stocks moved mostly higher over the course of the trading session on Tuesday after recovering from an initial move to the downside. The markets benefited from a positive reaction to remarks by Federal Reserve Chair Janet Yellen. Asian markets too are trading in the green. Industrial production in Japan was down a seasonally adjusted 6.2 per cent on month in February, the Ministry of Economy, Trade and Industry said in Wednesday's preliminary reading - marking the largest single-month decline in five years. The headline figure missed expectations for a decline of 5.9 per cent following the 3.7 per cent increase in January. On a yearly basis, industrial production fell 1.5 per cent - beating forecasts for a decline of 1.7 per cent following the 3.8 per cent contraction in the previous month. Upon the release of the data, the METI maintained its assessment of industrial production, saying that it has been fluctuating indecisively."

Asian stocks rose as a result of Yellen's dovish comments, with investors also encouraged by a rally in crude oil prices and expectations that the European Central Bank will ease policy later in the day.

Foreign investors have bought a net $3.08 billion in Indian shares so far this month, taking the year's inflows to $208.58 million.

“It's broadly a liquidity-driven push, which has come from the global market. Earlier there were apprehensions that there will be tightening of liquidity, but Fed comments show it's not in hurry to do so,” said Deven Choksey, managing director at KR Choksey Securities.

World stocks rose on Wednesday as markets pared back expectations for how fast and how far US interest rates might rise this year, bruising the dollar and boosting sovereign bonds.

MSCI world equity index, which tracks shares in 45 countries, rose 0.8 per cent near to 2016 highs after Federal Reserve Chair Janet Yellen urged caution on further rate hikes despite calls from some policymakers for faster progress.

Asian shares rallied on Wednesday as markets scaled back expectations for how fast and how far US interest rates might rise this year, bruising the dollar and boosting sovereign bonds.

MSCI’s broadest index of Asia-Pacific shares outside Japan reversed four sessions of losses to jump 1.3 per cent. South Korea hit its highest for the year so far, while Shanghai bounced 1.4 per cent.

The S&P 500 closed at its highest in 2016 on Tuesday after Federal Reserve Chair Janet Yellen called for caution on raising interest rates - music to Wall Street's ears.

In her first comments since the Fed held steady on rates earlier this month, Yellen said global risks remained, including uncertainty over China and low oil prices.

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