Mumbai: As the assembly election overhang lifted and the final results came in along expected lines, investors ignored tremors from Mint Street, sending stocks 0.50% higher on Tuesday.

With the assembly poll outcome mirroring exit polls, the Bharatiya Janata Party’s (BJP) expected loss of power in key states failed to rattle the markets, which had priced in a Congress revival.

The Sensex closed at 35,150.01 points, up 190.29 points or 0.54%, while the Nifty closed at 10,549.15, up 60.70 points or 0.58%.

The India VIX index, the so-called fear index, closed at 17.94, down 12.20% in the steepest single-day fall of the year. VIX is the investors’ perception of the markets’ volatility in the near term. The low number shows investors do not expect a major correction, at least over the next month. The volatility index typically has an inverse correlation with the benchmark Sensex and Nifty indices.

As per the latest election trends, BJP was set to lose Rajasthan and Chhattisgarh to Congress, and was in a neck-and-neck race with it in Madhya Pradesh.

Analysts said that with the elections out of the way, investors would now start rebuilding positions, which could have begun on Tuesday itself. “Markets like certainty. After the election results in five states, the uncertainty in markets have reduced," said Siddhartha Khemka, head of retail research, Motilal Oswal Securities.

Others agree. According to Pramod Gubbi, co-founder, Marcellus Investment Managers, the election results may have a short-term impact on the markets. “In terms of policy matters, our research shows that election hardly matters, as the reform process continues; only the pace differs irrespective of the political party in power," he said. “Overall, stock prices track earnings. By and large, earnings of good companies have been consistently strong irrespective of how the macro is, while weak companies have been struggling. We, as investors, are not particularly worried about elections."

“The election results evidently are not taken too seriously which is logical as it does not prima facie indicate a change in any policy per se," Care Ratings said in a note. “There could be some changing priorities on the fiscal side but the market is willing to wait rather than speculate."

With retired bureaucrat Shaktikanta Das named the new RBI governor in place of Urjit Patel, who abruptly quit on Monday, markets will now focus on his stance on various pending issues that are up for further discussion.

Shares of banks and non-banking finance companies (NBFCs) outperformed benchmark indices, hoping that Patel’s successor might re-examine the demand for an easier prompt corrective action (PCA) framework and a special liquidity window. Nifty PSU Bank index was up 2.65% while BSE Bankex was up 0.6%. Among private banks, Yes Bank surged 8.1%, South Indian Bank 4.3%, Kotak Mahindra Bank 3.4%, Axis Bank 2.3%, Federal Bank 2%, RBL Bank 1.8% and IDFC Bank 1.7%.

Among public sector lenders, Punjab National Bank was up 6.1%, Canara Bank 3.2%, Central Bank of India 2.9%, State Bank of India 2.8%, Bank of Baroda 2.3%, Syndicate Bank 2%, Indian Bank 1.8% and IDBI Bank 1.3%.

The rupee ended at 71.87, down 0.74% from Monday’s close of 71.34. The currency opened at 72.44 and touched a high and a low of 71.68 and 72.44, respectively. The 10-year government bond yield closed at 7.528%, against its previous close of 7.587%.

Ravindra Sonavane contributed to this story.

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