Indian markets settled firmly higher in the special one-hour Diwali Muhurat trading session which marks the start of Samvat 2078. Positive global cues and a sharp cut excise duty on petrol and diesel lifted the domestic sentiment. Reversing its two-session sliding streak, the 30-share BSE Sensex climbed 295.70 points or 0.49 per cent to close at 60,067. On similar lines, the broader NSE Nifty advanced 87.60 points, or 0.49 per cent, to finish at 17,916.80.

In the Sensex kitty, prominent gainers were M&M, ITC, Bajaj Auto, L&T, Kotak Bank, Sun Pharma and Nestle India, spurting as much as 2.87 per cent. In contrast, ICICI Bank, UltraTech Cement, Asian Paints, and Dr Reddy's closed in the red, shedding up to 0.43 per cent.

Barring metal, all BSE sectoral indices finished in the green, led by auto, consumer discretionary goods, capital goods, industrials and FMCG. A similar trend was seen in the broader markets, with the BSE small-cap index jumping 1.36 per cent and the mid-cap gauge gaining 0.73 per cent.

The BSE and NSE will remain closed on Friday (November 5) on the occasion of 'Diwali Balipratipada'.

In Samvat 2077, while Nifty delivered 40% return while midcap and smallcap indices gave stronger returns.

Dhiraj Relli, MD & CEO, HDFC Securities, said: "After a great year for equity markets, investors are looking forward to markets continue rising though not at the same pace. Global headwinds in the form of rising inflation and withdrawal of monetary stimulus may impact the momentum, but strength in Indian macros and improving micros may help offset these. Investors need to conduct portfolio review, asset allocation review, and raise the quality of stocks held in their portfolio."

Global stocks markets were mostly higher today, a day after the Federal Reserve said it would this month start tapering its pandemic support programme. 

As widely expected, the Fed on Wednesday said it would start reducing the monthly pace of quantitative easing (QE) stimulus purchases by $10 billion for Treasuries and $5 billion for mortgage-backed securities. But the central bank said the announcement fuelled another record rally on Wall Street, and gains across Asia.

“After the spectacular returns in Samvat 2077, investors should expect modest returns only, say in low teens, in Samvat 2078. This Samvat is likely to be very volatile, unlike last Samvat. Rising inflation would be the biggest known threat to the market. Rate hikes by the Fed can happen by the end of 2022 or, perhaps, earlier than that if persistent inflation and the bond market forces the Fed's hands. Rate hikes by the Fed will lead to some capital flight from emerging markets like India and this is likely to trigger some sharp correction in the market. But the correction may turn out to be low and short-lived if the economy rebounds smartly," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.