MUMBAI: Market benchmark indices Sensex and Nifty surged in early trade on Thursday amid a sharp decline in crude oil prices and hopes that a resolution to the West Asia conflict may happen soon after the results of the midterm elections where American voters gave the opposition Democratic Party control of the US Congress.
Sustained foreign fund inflows and a sharp rally in the US markets also added to markets' optimism during the initial trading.
The 30-share BSE Sensex jumped 1,403.71 points to 78,689.87 in early trade. The 50-share NSE Nifty surged 378.85 points to 24,340.40.
In the 30 Sensex firms, InterGlobe Aviation, Asian Paints, Bajaj Finance, Maruti, Mahindra & Mahindra and UltraTech Cement were among the major winners.
Kotak Mahindra Bank and Bharti Airtel were the laggards.
Brent crude, the global oil benchmark, traded 1.07 per cent lower at USD 93.61 per barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs 7,284.03 crore on Wednesday, according to exchange data.
In a stinging rebuke to President Donald Trump, American voters on Tuesday gave the opposition Democratic Party control of the US Congress and flipped key gubernatorial posts in widely watched elections that will have consequences far beyond America.
Trump's Republican Party faced stunning defeats in its strongholds such as Texas, Georgia, Iowa and Ohio, where it lost the governors’ posts to the Democrats.
The grand old party also faced a drubbing in Senate races in Texas, Maine, South Carolina, North Carolina, Kansas, Iowa and Ohio, where Trump campaigned with a simple message urging voters to pretend that he was on the ballot.
The Democrats won control of both the Senate and the House of Representatives, ending the Republicans’ hold on the two chambers of Congress.
"With tailwinds for the economy getting stronger, the bullish trend in the market is set to continue. The strongest positive for the market is the sharp 10 per cent fall in Brent crude to around USD 94 level. This decline is on hopes that a resolution to the US-Iran conflict is likely soon since this conflict and the consequent high crude prices contributed significantly to the Republican rout in the midterms," V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.
In Asian markets, South Korea's Kospi and Japan's Nikkei 225 index traded lower, while Shanghai's SSE Composite index and Hong Kong's Hang Seng index quoted higher.
The US equity markets ended sharply higher on Wednesday. The Dow Jones Industrial Average surged 3.03 per cent, S&P 500 jumped 1.58 per cent and Nasdaq Composite was up 1.44 per cent.
"Wall Street rallied sharply overnight, while the decline in crude and Treasury yields improved the broader risk environment. Brent has fallen almost 10 per cent to around USD 94.50 as traders removed part of the war premium after signals that political pressure could push the US administration toward negotiations with Iran. Unlike the earlier gradual decline, the magnitude of this move can materially improve India’s near-term macro and earnings outlook if sustained.
"However, the fall remains driven by expectations rather than a confirmed settlement or full restoration of energy flows, leaving crude vulnerable to any setback in negotiations," Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Analyst firm, said.
On Wednesday, the Sensex rose 383.55 points, or 0.50 per cent, to settle at 77,301.40, its highest closing level in more than two months. The Nifty was up 149.75 points, or 0.63 per cent, to end at 23,960.60.
In the last five trading sessions, the Sensex jumped 4,055.37 points, or 5.53 per cent, and the Nifty surged 1,261.75 points, or 5.55 per cent.