BENGALURU: Indian shares advanced on Thursday as a less hawkish stance by the U.S. Federal Reserve on rate hikes eased market concerns, while a drop in overnight crude prices helped cool domestic inflation fears.

Blue-chip indexes Nifty 50 settled 0.19% higher at 22,648.2 points, while the S&P BSE Sensex appreciated 0.17% to 74,611.11.

The U.S. central bank late on Wednesday kept interest rates unchanged as expected by the markets and flagged hopes of no rate hikes in the near term.

The broader, more domestically focussed small-caps rose 0.04%, while the mid-caps gained 0.5%, outperforming the benchmarks.

Fed Chair Jerome Powell’s remark that “a rate increase is unlikely” is regarded by the market as dovish, said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Market sentiments were also powered by gains in the Nifty energy index - which was up 1.1% - driven by an overnight drop in global oil prices amid rising hopes of a ceasefire agreement in the Middle East.

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Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp gained between 3.9% and 7.7%.

The drop in oil prices to a seven-week low also boosted positive sentiment for inflation expectations in India, the world’s third-largest importer and consumer, benefiting paint makers Asian Paints and Grasim Industries, which gained 3.5% and 1.1%, respectively.

Auto stocks also rose 1.1%, helped by higher April sales, while metal stocks added 1.13% on an easing dollar.

A weaker U.S. dollar makes metals cheaper to holders of other currencies.

Meanwhile, gains on the Nifty were capped by a decline in high-weightage bank stocks, which dropped 0.3%, dragged by private lender Kotak Mahindra Bank, which lost 3% after the private lender’s joint managing director resigned following two months in the role.