(Updates to close)

By Manvi Pant

BENGALURU, May 2 (Reuters) -

Indian shares advanced on Thursday as a less hawkish stance

by the U.S. Federal Reserve on rate hikes eased market concerns,

while a drop in overnight crude prices helped cool domestic

inflation fears.

Blue-chip indexes Nifty 50 settled 0.19% higher

at 22,648.2 points, while the S&P BSE Sensex

appreciated 0.17% to 74,611.11.

The U.S. central bank late on Wednesday kept interest

rates unchanged as expected by the markets and flagged hopes of

no rate hikes in the near term.

The broader, more domestically focussed small-caps

rose 0.04%, while the mid-caps

gained 0.5%, outperforming the benchmarks.

Fed Chair Jerome Powell's remark that "a rate increase

is unlikely" is regarded by the market as dovish, said VK

Vijayakumar, chief investment strategist at Geojit Financial

Services.

Market sentiments were also powered by gains in the

Nifty energy index - which was up 1.1% - driven by

an overnight drop in global oil prices amid rising hopes of a

ceasefire agreement in the Middle East.

Bharat Petroleum, Hindustan Petroleum

and Indian Oil Corp gained between 3.9% and 7.7%.

The drop in oil prices to a seven-week low also boosted

positive sentiment for inflation expectations in India, the

world's third-largest importer and consumer, benefiting paint

makers Asian Paints and Grasim Industries, which gained 3.5% and

1.1%, respectively.

Auto stocks also rose 1.1%, helped by higher

April sales, while metal stocks added 1.13% on an

easing dollar.

A weaker U.S. dollar makes metals cheaper to holders of

other currencies.

Meanwhile, gains on the Nifty were capped by a decline in

high-weightage bank stocks, which dropped 0.3%,

dragged by private lender Kotak Mahindra Bank, which

lost 3% after the private lender's joint managing director

resigned following two months in the role.