The equity markets began the week on a positive note, but the gains were capped as investors preferred to wait for the outcome the two-day meeting of the US Federal Reserve that begins on Tuesday.

After a three-session losing streak and a weak start, the benchmark Sensex finished with gains of 300.44 points at 59141.23.

On the NSE, the broader Nifty rose 91.40 points, or 0.52 per cent, to close at 17622.25. Mahindra & Mahindra was the top gainer in the Sensex pack, rising 3.05 per cent.

It was followed by Bajaj Finance, SBI, Nestle India, HUL, Bajaj Finserv and HDFC, which rose up to 2.79 per cent.

The FOMC will begin its two-day meeting on Tuesday.

While it is largely expected that the US central bank will again hike interest rates by 75 basis points, some analysts are not ruling out even a 100 basis point increase.

According to Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services, the markets are likely to remain range-bound ahead of the key decision that will be announced on September 21.

“While it is widely expected that the Fed will go for an at least 75 basis points hike, however, given the stubbornness of US inflation and robust numbers from US data points such as retail sales and a strong labour market, there is a high chance that the aggressive stance towards rate hike is likely to continue for a prolonged time.

“Even the Bank of England is likely to announce a 50 bps rate hike to combat inflation and could keep global markets under pressure,” he said.

Market circles added that though rising inflation and interest rate worries could affect the domestic sentiment, it is unlikely to have a huge impact given the resilient economic activity amid the festival season.

At the forex market, the rupee closed at 79.77 against the previous close of 79.74 to the greenback.

US treasury yields

Benchmark 10-year US Treasury yields rose to their highest in over 11 years on Monday as investors braced for the Federal Reserve’s policy decision on Wednesday, where it is expected to deliver another large interest rate hike.

The 10-year yield, the most significant interest rate benchmark globally, rose as much as six basis points to 3.5 per cent, the highest since April 2011.

The Fed meets on Wednesday. Money markets are pricing in around an 80 per cent chance of a 75 basis-point move, and a 20 per cent chance of a larger, 100 basis-point rate hike.

With inputs from Reuters