Bombay Stock Exchange in Mumbai (BSE)
India's benchmark equity index extended gains from a record as a ruling party alliance won a state election, adding to positive sentiment amid a business activity pickup. Image Credit: Bloomberg
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Mumbai: India's benchmark equity index extended gains from a record as a ruling party alliance won a state election, adding to positive sentiment amid a business activity pickup.

The S&P BSE Sensex advanced 0.7% to 43,573.55 as of 10:05 a.m. in Mumbai, while the NSE Nifty 50 Index climbed by a similar magnitude. Both measures are set for their longest winning streak in a month that's sent them to new highs since Monday.

Prime Minister Narendra Modi's party retained control through a coalition in the eastern state of Bihar in its first election since the pandemic struck. While India has the world's second-largest coronavirus case count, new infections are less than half of the peak in mid-September, according to data from Johns Hopkins University.

Modi's "win in Bihar suggests political immunity from the pandemic," Sonal Varma, chief economist for India and Asia, ex-Japan, at Nomura Holding Inc. in Singapore, wrote in a note. The results indicate that the Prime Minister remains popular, and is likely to enhance the standing of the party in the state, she said.

India's emergence from the world's biggest lockdown has triggered a revival in demand, even as Asia's third-largest economy is forecast to contract this year for the first time in about four decades. A combination of better-than-expected earnings, a Joe Biden presidency and progress toward a Covid-19 vaccine this week helped propel the key indexes to record highs.

"There is optimism that an economic recovery may be faster as business activity is steadily rising close to the pre-pandemic levels," said Kranthi Bathini, equity strategist at WealthMills Securities Ltd.

Still, both gauges' relative strength index is above 70, a level that may signal they're overbought, while a measure of volatility Tuesday climbed the most in nearly a month.

As earnings season continue, 28 of the 43 Nifty 50-member companies that have announced results so far have beaten or matched analyst estimates.

The rupee weakened 0.1% to 74.28 per U.S. dollar, while the yield on the 10-year government bond was little changed at 5.92%.