(Updates at 10:30 a.m. IST)

By Manvi Pant

BENGALURU, May 2 (Reuters) - Indian shares edged up on

Thursday, in line with Asian peers, after a less hawkish U.S.

Federal Reserve downplayed an interest rate hike, while a drop

in global oil prices also helped cool domestic inflation fears.

The blue-chip Nifty 50 edged up 0.3% to 22,682.75

points and the S&P BSE Sensex appreciated 0.4% to

74,743.95.

Fed Chair Jerome Powell late on Wednesday said a rate hike

was unlikely, but reiterated that a rate cut would be considered

only if inflation in the economy eased further.

Fed rate hike makes stock market investments in emerging

markets such as India unattractive for foreign investors as

higher U.S. bond yields offer safety over riskier assets.

The equity markets reacted positively to the assurance that

the next policy adjustment would not involve a rate hike, said

Dhawal Ghanshyam Dhanani, Fund Manager, SAMCO Mutual Fund.

The IT index traded flat after the Fed decision.

Higher interest rates have been weighing on India's IT sector,

as it has resulted in lower client spending in the U.S., a key

market.

Meanwhile, global oil prices fell to a nearly seven-week low

overnight, seen as a positive sign for inflation expectations in

India, the world's third-largest importer and consumer.

The Nifty energy index gained 1.1%.

Bharat Petroleum, Power Grid Corp rose

3.5% and 4.6%, respectively to lead gains in the energy index.

Meanwhile, shares of Kotak Mahindra Bank lost 4%

after the private lender said on Tuesday its joint managing

director KVS Manian resigned after two months in the role.

Kotak was the top loser in the Nifty bank index,

which is up 0.2%.

Small- and mid-cap shares surged

to 0.4%, and 0.2%, respectively, mirroring the benchmarks.