Indian equity benchmarks staged a sharp rebound on Thursday, recovering from recent losses as buying in the second half of the session lifted the indices, despite weak global cues and persistent foreign fund outflows.

The Nifty gained 1.05% to close at 22,936.77, reclaiming the psychologically significant 22,900 mark, while the Sensex advanced 1.2% to settle at 74,151.04.

“Benchmark indices closed near the day’s highs, supported by fresh buying in the second half of the session, particularly across the broader market. Despite volatility surrounding the Sensex expiry, investor sentiment improved after the Fed kept interest rates unchanged,” said Pabitro Mukherjee, deputy vice-president, research, at Bajaj Broking.

The positive close came even as global markets remained cautious following the U.S. Federal Reserve’s decision late Wednesday to leave its benchmark interest rate unchanged at 3.75%-4%, in line with market expectations. Citing persistent inflation, the central bank indicated that it would assess incoming economic data before making further policy adjustments.

However, the absence of clear forward guidance from Federal Reserve Chairman Kevin Warsh left investors uncertain about how long U.S. interest rates would remain elevated.

Higher U.S. interest rates tend to make dollar-denominated assets, particularly U.S. Treasuries, more attractive to global investors, potentially diverting capital away from emerging markets such as India. The resulting pressure on foreign portfolio flows can weigh on domestic equities and the rupee.

The Indian currency remained under pressure, touching a two-week low of 95.38 against the dollar before recovering to close nearly unchanged at 95.26. Foreign exchange traders attributed the recovery partly to likely dollar sales by the Reserve Bank of India.

The rupee had drawn support from foreign fund inflows linked to initial public offerings, particularly the ₹32,000-crore ($3.2 billion) issue of Jio Platforms. However, such inflows have yet to provide lasting relief to the currency amid persistent external pressures.

Crude oil remains another significant headwind. Brent crude continued to trade around $115 a barrel amid the escalating West Asia crisis, raising concerns over India’s import bill, inflation and the country’s external balances. As a major oil importer, India is particularly vulnerable to a sustained rise in energy prices, which can increase dollar demand and put further pressure on the rupee.

“The rupee’s inability to sustain its early gains, even as the dollar softened after the Fed decision, suggests that domestic demand for dollars and possible overseas debt-repayment outflows are outweighing support from global currency movements,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP.