BENGALURU, July 28 Reuters India39;s bluechip stock indexes hit a threemonth closing high on Thursday, led by a surge in Bajaj Finance and Bajaj Finserv, in the backdrop of the U.S. Federal Reserve raising interest rates as expected.

The NSE Nifty 50 index was up 1.73 at 16,929.6, while the SP BSE Sensex rose 1.87 to 56,857.79, both hitting their best closing levels since May 2. The indexes are set for their best month in nearly a year with gains of over 7.

The Fed increased interest rates by 75 basis points on Wednesday, meeting expectations, while Chair Jerome Powell39;s comments raised hopes for a slower pace of rate hikes, boosting investor sentiment across markets.

Economists are now trimming estimates on how much the Reserve Bank of India will hike rates at its policy meet next week.

We believe that the RBI MPC may hike rates by only 25 basis points, instead of a frontloaded hike of 50 bps or higher, Bank of Baroda economist Aditi Gupta wrote in a note.

Inflation trajectory has evolved much in line with RBI39;s projections, and in absence of any fresh shocks is likely to moderate in the coming quarters, Gupta said.

Bajaj Finance soared 10.6 on strongerthanexpected firstquarter results, while Bajaj Finserv jumped 10 after the company announced a stock split, bonus share issue and a surge in profit.

The Nifty Midcap 100 and the Nifty Smallcap 100 indexes meanwhile each closed 0.8 higher.

The Nifty IT index advanced 2.8, with IT major Infosys climbing 3.2….