Indian shares rallied to a one-week high on Wednesday as investors cheered the first batch of exit polls which signalled a likely general election win next month for the country's pro-reform ruling coalition.
The 30-share Mumbai stock exchange index rose 1.23 percent to 5,876.42 points. Market breadth was positive, gainers outnumbering losers nearly two to one on healthy trading volumes.
"The exit polls clearly triggered the rally today, and boosted all front-line stocks," said Ambareesh Baliga, a vice president of Karvy Stock Broking.
Exit polls aired by TV channels predicted the Bharatiya Janata Party and its allies would win between 69 and 93 of the 140 seats at stake on Tuesday, prompting pollsters to forecast the ruling coalition would win a simple majority in the 545-seat lower house of India's parliament.
The three-week-long election, for which 670 million people are eligible to vote, ends on May 10. Results are due on May 13.
A clear electoral verdict, especially for the ruling combine, is seen as positive for market-friendly reforms and economic growth.
Karvy's Baliga said shares were likely to remain vulnerable to swings until the final results of the vote were declared.
"This will only be a short-term effect, and the index will drift downward again, continuing to take cues from exit polls."
Among the stocks that rode the early electoral euphoria were index heavyweight Reliance Industries, which rose nearly three percent to 568.20 rupees.
Cement and steel stocks also rallied on expectations of better prices and higher demand as construction activity picks up in the rebounding economy.
Investors showed their appetite for fresh issues remained high despite a recent spate of big-ticket public offerings. The initial public offering of New Delhi Television, which is raising 1.09 billion rupees, was fully subscribed within 13 minutes.
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