BENGALURU: Indian shares joined a global equity rally on Thursday after the US Federal Reserve maintained its projection of three rate cuts this year, with metals leading the charge on the back of a softer US dollar.

The blue-chip NSE Nifty 50 index gained 0.88% to 22,028.90, while the BSE Sensex added 0.87% to 72,729.21, as of 10:05 a.m. IST.

“Markets were not expecting this kind of clarity on rate cuts from the US Fed, and that has driven the rally,” said Avinash Gorakshakar, head of research at Profitmart Securities.

Metals jumped 2.1%, rebounding from a 1.7% drop in the last two sessions, helped by improved risk appetite and a weaker US dollar after the Fed said it remained on track for three interest rate cuts this year.

A weaker dollar makes metals cheaper for holders of other currencies.

Tata Steel, JSW Steel and Hindalco gained between 2% and 3.3%, and were among the top five Nifty 50 gainers.

The Fed’s commentary aided expectations of a rate cut in June, the odds of which rose to 77% from 59% a day ago according to the CME FedWatch Tool, triggering a global markets rally.

All 13 major sectors logged gains, with the key financial services index rising 1.1%.

Indian shares flat as caution prevails on Fed decision

US-rate sensitive information technology gained 1.2%, after droppingg 5.1% in the last four sessions.

The broader, more domestically-focussed small- and mid-caps gained about 2% and 1.75%, respectively, shirking off their recent underperformance.

It will be unlikely for the rally to continue in broader markets beyond a session or two because the concerns over elevated valuations remain, Gorakshakar added.

Wockhardt gained 4% after launching a share sale to institutional investors.

Rail Vikas Nigam added 4% on emerging as the lowest bidder on a $20 million project.