The benchmark Sensex ended the session higher by nearly 220 points as the exit polls have unanimously predicted the BJP emerging victorious in both Gujarat and Himachal Pradesh with a comfortable majority.

The 30-share BSE index ended higher by 216.27 points or 0.65 per cent at 33,462.97 and the 50-share NSE index Nifty closed up by 81.15 points or 0.79 per cent at 10,333.25. The Sensex touched the day's high of 33,621.96 and a low of 33,405.82.

Among BSE sectoral indices, metal index gained the most by 2.63 per cent, followed by consumer durables 1.71 per cent, auto 1.38 per cent and capital goods 1.11 per cent.

Top five Sensex gainers were M&M (+3.56%), Coal India (+3.02%), Dr Reddy's (+2.52%), HDFC Bank (+1.95%) and Adani Ports (+1.75%), while the major losers were Cipla (-2.53%), ONGC (-0.87%), Asian Paints (-0.45%), TCS (-0.42%) and State Bank of India (-0.41%).

Exit poll results

The BJP is set to retain power in Gujarat for the sixth term and win Himachal Pradesh with a big majority, most exit polls have forecast. The BJP is expected to win Gujarat comfortably, winning at least 99 of the 182 seats in the State Assembly.

A couple of exit polls have forecast that the party may indeed increase its seat share from the current 115 to as much as 120-128 seats. An aggregate of various exit polls estimates a 116-seat win for the BJP in Gujarat. A party needs to win 92 seats for a simple majority.

Litmus test for Modi

Seen as a litmus test for Modi ahead of a national election in 2019, surveys showed that the BJP will be able to shake off their most serious challenge yet from a combined Opposition in the western Indian state of Gujarat. Voting closed on Thursday, and the results will be out Monday.

“The benefit for the markets if BJP wins is that there will be no obstruction in the form of policy changes,” said R. Sreesankar, co head - institutional equities at brokerage Prabhudas Lilladher. “However, it is difficult to gauge the long-term impact because of factors like interest rates rising globally, which could lead to liquidity drain from the markets.”

Separate exit surveys released for elections held in the northern Indian state of Himachal Pradesh also showed Modi's party emerging as a winner. The poll results will also boost sentiment among foreign investors, traders said.

“Had the exit poll results been bad for Gujarat, then we would have seen foreign investors selling debt,” said a foreign bank dealer.

Weak macroeconomic data

The poll results have returned optimism to the markets after investors turned cautious earlier in the week when data showed retail inflation in November breached the central bank's medium-term target of 4 per cent, and annual industrial output grew a lower-than-expected 2.2 per cent in October.

Asian shares edged higher on Friday, on track for weekly gains, though sentiment was kept in check by Wall Street's weakness on concerns about the progress of US tax reform.

MSCI's broadest index of Asia–Pacific shares outside Japan was up 0.04 per cent in early trade, poised to gain 1.2 per cent for the week.

Major US stock indexes fell on Thursday, with the S&P 500 down the most in a month, as investor worries over potential roadblocks to the Republicans' tax overhaul more than offset optimism over strong retail sales data.

The Dow Jones Industrial Average fell 76.77 points, or 0.31 per cent, to close at 24,508.66, the S&P 500 lost 10.84 points, or 0.41 per cent, to 2,652.01 and the Nasdaq Composite dropped 19.27 points, or 0.28 per cent, to 6,856.53.

(With inputs from Reuters)

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