With US Fed hike factored in, Sensex gains 1.8%; oil surges 8%

Domestic stock markets on Thursday shot up by 1.84 per cent after the US Federal Reserve increased interest rates by 25 bps and signalled more hikes ahead in order to tackle the inflation. With the global markets staging a rally amid peace talks between Russia and Ukraine, the benchmark Sensex jumped 1,047 points to 57,863.93 and NSE Nifty index vaulted by 312 points to 17,287.05.

The rupee spurted by 41 paise to close at 75.80 against the US dollar on Thursday, supported by positive domestic equities and broad dollar weakness. Unlike the taper-tantrum episode of 2013, the rupee has held up quite well this time when compared to its own past.

Among the sectoral gainers, auto, banks, energy and realty rose by up to 3.14 per cent. “The positive commentary on the US economy triggered a rally in US stocks overnight and Indian equity markets are seen to be catching up, said Nishit Master, Portfolio Manager, Axis Securities.

The rate hike by Fed was on expected lines due to high inflation risk coupled with geopolitical tensions. The US Treasury yields had shown an immediate spike after the FOMC announcement but stabilised thereafter. The current rate hike along with anticipated monetary tightening indicates the Fed’s stance of controlling the high inflation prevalent in the US, analysts said.

Asian markets have reacted positively on account of the Russia-Ukraine situation entering the resolution phase which was further supported by stabilization of crude prices. Taking this into account, the RBI may reassess its accommodative stance in the next month’s policy meeting.

Oil prices climbed over 7 per cent on Thursday, continuing a series of wild daily swings, as the market rebounded from several days of losses on renewed focus on supply shortages in coming weeks due to sanctions on Russia.

Benchmark Brent crude futures gained $8.23, or 8.4 per cent, to $106.25 a barrel by 11:45 a.m. EDT (1545 GMT). US West Texas Intermediate (WTI) crude was up $7.42, or 7.8 per cent, to $102.46 a barrel, as per a Reuters report.

US stocks extended their gains on Thursday following a rally in the previous session as investors assessed the path laid out by the Federal Reserve for interest rate hikes, while closely tracking the Russia-Ukraine peace talks.

At 12:23 pm ET, the Dow Jones was up 147.09 points, or 0.43 per cent, at 34,210.19 while the Nasdaq was up 36.97 points, or 0.28 per cent, at 13,473.52.

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