India's NSE index closed at its highest in two years on Monday, near a key psychological level of 9,000, on hopes the ruling Bharatiya Janata Party (BJP) would win the elections in the northern state of Uttar Pradesh.
The broader NSE index ended up 0.7 percent at 8,963.45, its highest closing since March 2015, while the benchmark BSE index ended 0.8 percent higher at 29,048.19.
Reliance Industries Ltd climbed as much as 4.3 percent to its highest since May 2008, and was the top percentage gainer on the NSE index.
The elections are the world's largest this year and will have a key influence on Prime Minister Narendra Modi's chances of clinching a second term in 2019. Election results are due out on Saturday.
Sentiment was also boosted as the country moved a step closer towards launching a long-awaited new national sales tax from July after a panel of federal and state finance officials finalised two key bills to be put before parliament.
"The expectation is that the BJP government will come into power in U.P. (Uttar Pradesh), and that is possibly driving the market a little more confident than before," said Deven Choksey, managing director at KR Choksey Shares and Securities.
Financial stocks accounted for nearly half of the gains on the NSE index, with State Bank of India and Axis Bank Ltd leading the rise. Shares of SBI and Axis Bank rose up to 1.5 percent each.
Coal India Ltd climbed as much as 2 percent after unit Central Coalfields approved share buyback of up to 10.02 billion rupees ($150.12 million), according to an exchange filing on Saturday.
IT stocks were among the top losers, with Tata Consultancy Services Ltd and Infosys Ltd falling over 1 percent each, amid lack of clarity over processing of H1B visas in the United States.
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