Mumbai,  Indian equity markets edged higher on Thursday as US Federal Reserve's dovish comments helped ease the negative sentiments owing to disappointment over the Union Budget.

Sensex closed 266.07 points higher at 38,823.11, while the Nifty advanced by 84 point to 11,582.90.

"US Federal Reserve Chair Jerome Powell's dovish comments on Wednesday cemented hopes of an interest rate cut this month in the US and soft interest rate policies across the globe," said Deepak Jasani of HDFC Securities. 

"This boosted global stocks, pulled down bond yields and weakened the US dollar. Fears of FPI selling due to the adverse provisions in the Union Budget has abated for the time being," Jasani added.

InterGlobe Aviation, the parent company of Indigo, the largest private airline in India slipped 3.07 per cent lower as investors continued to fret over the likely hood of operations getting affected by the conflict among its promoters.

Meanwhile, Foreign Institutional Investors (FIIs) have sold Rs 1,768 crore, in 5 sessions, since the Budget proposal on July 5.