Rs 5 lakh crore added to investors' kitty! Key factors behind 750-point rally in Sensex today

After Fed chair Jerome Powell kept hopes alive for interest rate cut in June, Sensex rallied over 750 points and Nifty jumped 1% on Thursday as buying was seen across all sectors.

The market capitalisation of all listed companies on BSE increased by Rs 5.41 lakh crore to Rs 379.53 lakh crore.

Fed Chair Jerome Powell said that recent hot inflation readings had not changed the underlying story of slowly easing price pressures and reiterated the central bank's earlier forecast of soft landing for the world's largest economy.

The comments aided expectations of a rate cut in June, the odds of which rose to 77% from 59% a day ago, according to the CME's FedWatch Tool.

Following the Fed's projection of three rate cuts this year, Nifty IT jumped over 1%, led by LTTS, Coforge, Wipro, and HCL Tech.

Meanwhile, Nifty Bank, Financials, Media, Metal, and Oil & Gas traded over 1% higher.

Here are key factors that aided today's rally:

• US sticks to rate cut plan

Overnight the Fed left U.S. rates on hold between 5.25% and 5.5%, as expected, and nudged up inflation forecasts. Policymakers' median projection for three 25 basis point rate cuts this year was unchanged from December.

Fed Chair Jerome Powell told reporters sticky inflation reports show price pressures but "haven't really changed the overall story, which is that of inflation moving down gradually".

• Decline in US treasury yields

US Treasury yields fell slightly in New York trade and were steady in Asia. Two-year yields were last at 4.59% and 10-year yields at 4.26%.

• Global markets rally

Asian shares bounced while Japan's Nikkei jumped to record highs on Thursday after the U.S. Federal Reserve indicated it would stick with plans for cutting interest rates. MSCI's broadest index of Asia-Pacific shares outside Japan jumped 1.6%.

The S&P 500 notched a record closing high overnight, and US and European futures rose in Asia trade.

• Decline in dollar index

In foreign exchange markets the dollar, which had gained in recent days against the risk of a more hawkish turn from the Fed, was sold against most major peers, lifting the yen from near multi-decade lows to 150.45 per dollar. Meanwhile, the Indian rupee rose 12 paise to 83.06 against the US dollar in early trade.

The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, declined 0.17% to 103.21 level.

• Buying at lower levels

After experiencing a correction of nearly 3% last week, investors responded by engaging in buying activity at lower levels. The Nifty reached a 52-week high of 22,526 on March 11, with the Nifty level standing at 21,839 the previous day.