Mumbai: In a volatile session, Indian equities on Wednesday managed to close stronger ahead of the General Election results due on 23 May.

The Sensex closed 0.36% higher at 39,110.21 points, while the NSE Nifty 50 index rose 0.25% to close at 11,737.90 points. So far this year, the Sensex has risen 8%.

"Volatility index shot to four years high just ahead of the big event. Valuation is expensive depicting the risk of the market to handle such event risk, long-term investors can stay cautious," said Vinod Nair, Head of Research at Geojit Financial Services. “While actual outcome being in-line with the exit poll will be a relief to the market in the short-term. Formation of a government with a strong mandate will support the undercurrent by foreign inflows," Nair further added.

On Sunday, exit polls forecast that the Narendra Modi-led government will return to power for a second term, with Bharatiya Janata Party (BJP) and allies likely to secure over 300 seats in India’s 543-seat lower house.

"India's equity markets rallied to all-time highs on 19 May after Exit Polls forecast a stunning NDA majority. If this is confirmed on 23 May, we expect the euphoria to sustain near-term before the markets pivot back to the macro. The trends here are discomfiting with a structural fix likely to take time but stimulus, esp. monetary, may still lift sentiment for Industrials & Discretionary. We raise weights here, therefore, but Financials remain our highest OW", said Jefferies India in a 21 May note.

Investors also exercised caution ahead of the release of minutes of the latest US Federal Reserve policy meeting and a speech by European Central Bank President Mario Draghi. The market also worried about the steadily deteriorating US-China trade relationship.

The analyst continued to eye quarterly corporate earning which is showing signs of a slowdown. Net incomes at 24 of the 37 Nifty companies that have reported earnings so far have either topped or met the analyst estimates, according to data compiled by Bloomberg.

Dewan Housing Finance Ltd fell nearly 10% after the company said it will not accept new deposits, while stopping renewals of existing ones, with immediate effect. The beleaguered financier also said it will not allow premature withdrawals to "help reorganise its liability management."

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