India's NSE index rose 0.18 percent on Thursday tracking a rally in Asian markets after the US Federal Reserve signalled fewer rate hikes this year, but profit-taking capped broader advances. The broader NSE index rose 0.18 percent to end at 7,512.55 points, but the benchmark BSE index fell 0.02 percent to 24,677.37 points.
The Fed held interest rates steady on Wednesday and fresh projections showed policymakers now expect two hikes by the end of 2016, half the number seen in December.
The Fed statement boosted risk appetite and lifted sentiment across the board, with Asian stocks and oil prices gaining from the potential for more money to continue flowing into equities and commodities, rather being lured by higher US rates.
"Previously dollar was appreciating and that is what was bothering us. But right now, these positive inflows should continue and help rupee", said Ashu Madan, president of equity broking at Religare Securities.
The rupee rose to as much as 66.80 per dollar, its highest since January 13, from its Wednesday close of 67.22.
Foreign investors have bought a net $1.66 billion of shares in March, but still remain net sellers of $1.21 billion this year.
At these gains, both indexes are set for their best day since March 3. At their intraday high, both indexes had risen the most also since March 3.
Commodity-linked stocks such as Vedanta and NMDC rose 2.5 percent and 3.8 percent, respectively.
State-owned oil companies Oil India, Indian Oil Corp and Bharat Petroleum Corp gained 1.4-5.6 percent after the consortium signed energy deals with Russia's Rosneft. Mphasis rose 3.2 percent on a report that PE firm Blackstone emerged as the strongest contender to buy the IT services company from Hewlett Packard.