Dovish US Fed outlook buoys markets, Sensex up over 300 points

Mumbai, Dec 17 Bargain hunting, coupled with a dovish US Fed's monetary outlook and broad-based buying propelled Indian equity markets on Thursday, leading to a barometer index to provisionally close the day's trade with gains of over 300 points.

Initially, both the bellwether indices of the Indian equity markets opened on a positive note in sync with their Asian peers, as suspense cleared on the US Federal Reserve's move on a rate hike.

Investors breathed a sigh of relief as the US Fed's Federal Open Market Committee (FOMC) on early Thursday (India time) raised key interest rates by only 25 basis points.

The interest rate rise was widely expected and factored-in by investors. A higher rate hike would have led to massive pull-back of foreign funds from emerging economies like India. 

In addition, a dovish outlook by the US Fed, which said that it will maintain an accommodative stand, soothed investors' nerves.

Besides rate hike, the FOMC projected an improved US economic outlook, lower unemployment and stable inflation. This was a major positive trigger for Indian markets, as US is India's key exports market.

However, both the key indices ceded their initial gains during the mid-afternoon session, as profit bookings subdued markets. 

Furthermore, Finance Minister Arun Jaitley's comments that the GST (Goods and Services Tax) bill might get delayed due to parliament's logjam eroded investors' confidence.

Nevertheless, value buying brought back investors and again lifted the markets.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the day's trade higher by 301 points. 

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) provisionally closed higher during the day's trade. It ended 87.95 points or 1.13 percent up at 7,838.85 points.

The Sensex of the S&P Bombay Stock Exchange (BSE), which opened at 25,596.63 points, provisionally closed at 25,795.76 points (at 3.30 p.m.) -- up 301.39 points or 1.18 percent from the previous day's close at 25,494.37 points.

The Sensex touched a high of 25,831.31 points and a low of 25,448.32 points during the intra-day trade.

On Wednesday, the Sensex gained by 174 points or 0.69 percent, while the Nifty rose by 50 points or 0.65 percent.