The Sensex on Friday leapt over 1047 points — tracking a bullish trend in global markets despite the first interest rate hike by the US Federal Reserve in over three years.

Investor interest was driven by comments made by Fed chair Jerome Powell on the US economy and the moderation in oil prices.

Besides, signs of progress in peace talks between Russia and Ukraine and China pledging to support to its economy lifted sentiment.

Reflecting the return of the bullish mojo, the 30-share Sensex climbed 1.84 per cent, or more than 1000 points, for the second consecutive session to end at 57863.93, while the Nifty 50 surged 311.70 points, or 1.84 per cent, to settle at 17287.05 as investors accumulated auto, banking, financials, realty and metal stocks.

Fed impact

Investors were unmoved by the outcome of the meeting of the US Federal Reserve last night: they had already discounted the 25-basis-point hike in the policy rate announced by the Fed.

The Fed’s decision to hike interest rates six more times this year was in line with expectations. However, the American central bank laid out an aggressive plan to push borrowing costs to restrictive levels next year in a pivot from battling the coronavirus pandemic to countering the economic risks posed by excessive inflation and the war in Ukraine.

The Fed policymakers have made “excellent progress” on their plan to reduce the central bank’s nearly $9 trillion balance sheet, and could finalise details at their next policy meeting in May, Fed chair Jerome Powell said on Wednesday.

Overall, he said, the plan will look “familiar” to when the Fed last reduced bond holdings between 2017 and 2019, “but it will be faster than the last time, and of course it’s much sooner in the cycle than last time”.

Both the rate hike and the reduction in the size of the balance sheet will raise US rates that may lead to dollar outflows from the emerging markets such as India.