Equities and the rupee were trading with gains in the late morning session on Wednesday after the Reserve Bank hiked the key interest rate by 25 basis points and projected better growth.

Equity benchmark indices—Sensex and Nifty—which started the day on a positive note on the US Federal Reserve's comments on inflation, remained in the positive territory, with the Sensex consolidating gains above 300 points.

Meanwhile, the rupee erased most of its early gains and was trading 2 paise higher at 82.68 in the late morning trade.

In late morning trade, the 30-share Sensex surged 339.53 points or 0.56 per cent to 60,625.57 points, while the broader 50-share Nifty climbed 118.95 points or 0.67 per cent to 17,840.45 points. Sensex was higher by 360 points in early deals.

Among the Sensex pack, as many as 22 shares were in the green, while banking stocks witnessed mixed trends.

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On Wednesday, the Reserve Bank of India (RBI) hiked the repo rate by 25 basis points to 6.50 per cent, citing sticky core inflation.

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) by a majority decided to raise the policy repo rate by 25 basis points and keep a 'strong vigil' on the inflation outlook.

"The highlight of the monetary policy announcement which came on expected lines is the better than expected increase in GDP growth rate for FY24 to 6.4 per cent with sharp upward revision in FY Q1 and Q2 growth rates to 7.8 per cent and 6.2 per cent, respectively," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

According to him, optimism regarding FY24 GDP growth and containing the CPI inflation at 5.3 per cent is good news for the equity markets, even in the context of unabated selling by FIIs.

Trading in Asian markets was mixed on Wednesday.

On Tuesday, the US market ended sharply higher following Federal Reserve Chairperson Jerome Powell's remarks that inflation will drop significantly this year. He also said that more interest-rate hikes will be necessary, but the comments were seen as relatively less hawkish than anticipated by investors.