The prospects of a gradual approach to US rate hike gave markets more reason to rejoice as the Sensex today added 188 points to close at a 2-year high of 29,586 and the Nifty hit a new peak of 9,154, buoyed by strong capital flows. The NSE index rose to a record 9,158.45 (intra-day) before ending the day at a new closing high of 9,153.70, up 68.90 points, or 0.76 per cent, breaching its previous record of 9,087 on March 14.
The Federal Reserve, as expected, hiked the benchmark interest rate by a quarter percentage point, but gave a more dovish outlook for future hikes and painted a positive picture of the world's largest economy. The 30-share BSE index settled higher by 187.74 points, or 0.64 per cent, at 29,585.85. This is the highest closing since January 29, 2015 when it closed at 29,681.77.
The gauge had shed 44.52 points in the previous session. Investors continued to soak in BJP's superlative show in UP and Uttarakhand, which is seen as giving an impetus to the government's reforms drive.
Continued foreign inflows have sparked a rally in the rupee, which hit an over 16-month high of 65.22 (intra-day) against the dollar, accelerating buying activity further. "Though the record peaks have kept the investors nervy, the prospects of a gradual US rate hike looks to have improved the risk appetite, which is also reflected in the marked decline in volatility. This should also mean, save a negative surprise from monsoon forecast, Q4 numbers should prompt investors to be forward looking," said Anand James, Chief Market Strategist, Geojit Financial Services.
“Traders should continue with buy on dips approach and avoid contrarian trades. Market is offering opportunities across the board but it's important to keep a close eye on sector rotation and timing them accordingly,” advised Jayant Manglik, President, Retail Distribution, Religare Securities Ltd.