Equities on Tuesday ruled firm ahead of a key decision on interest rates by the US Federal Reserve on Wednesday — feeding on encouraging macro-economic data and positive global cues.

The BSE Sensex rallied more than 374 points to reclaim the 61000 mark, while the broader Nifty rose 133.20 points to end at 18145.40.

While most analysts expect a hike of 75 basis points (bps), some are betting on a smaller hike of 50bps.

Market circles are awaiting the guidance from the US central bank on Wednesday, and any dovish statements could result in a huge rally across the bourses.

A Bloomberg report quoting a JP Morgan note said the S&P 500 could fire up 10 per cent if the US central bank raises the interest rate by 50 basis points and Fed chair Jerome Powell indicates it is willing to tolerate high inflation by giving effect to relatively smaller increases in the future.

In the meantime, the attention was on macro-economic news that provided buying momentum on Tuesday.

While the seasonally-adjusted PMI was up to 55.3 in October from 55.1 in September, GST revenues registered the second highest collection ever in October.

The 30-share BSE Sensex opened above the 61000 level at 61065.58 and rose 374.76 points or 0.62 per cent to settle at 61121.35 — thus closing above this mark for the first time since January 17 this year. On the NSE, the broader NSE Nifty gained 133.20 points or 0.74 per cent to end at 18145.40.

“Investors are keeping an eye on the central banks’ policy meetings for any indications of a slowdown in the pace of rate hikes,” Vinod Nair, head of research at Geojit Financial Services said.

Australia rate

Australia’s central bank boosted its benchmark interest rate on Tuesday for a seventh consecutive month to a nine-year high of 2.85 per cent.

The Reserve Bank of Australia’s decision on a second consecutive quarter-percentage-point rise in the cash rate at its latest monthly board meeting follows four consecutive half-percentage-point hike in rates.

Parekh backs rate hike

Calcutta: Deepak Parekh, chairman of HDFC Ltd, on Tuesday said with inflation outside the comfort zone of the Reserve Bank of India, there is little choice for the regulator but to raise the repo rate.

The RBI has scheduled an additional meeting of the Monetary Policy Committee (MPC) on Thursday to draft its response to the government for failing to meet the inflation target.

He said the central bank should not destabilise growth with significant rate hikes.

“Under normal conditions, most central banks tended to adopt a more calibrated approach to rate increases — generally, say 25 basis points at a time,” Parekh said.

“Now they say for central banks, 75 is the new 25, which is the shift in stance to jumbo rate increases of 75 basis points each time.”

“As we speak, the Federal Open Market Committee meeting is underway and the markets expect the US Federal Reserve to deliver its fourth consecutive 75 basis point increase in its key policy rate,” Parekh said at an event organised by the Indian Chamber of Commerce in the city.

A STAFF REPORTER