Indian equities hit two-month highs as US midterms boost sentiment

Indian stock markets extended a sharp rally on Wednesday, with the Sensex climbing about 384 points to close above 77,300 and the Nifty 50 rising 150 points to end at 23,961, levels not seen in more than two months. Analysts linked the gains to a combination of robust corporate earnings, resilient festive-season consumption and improved global risk appetite following the United States midterm elections.

"Diwali fireworks" continued on Dalal Street, with mid- and small-caps extending their outperformance as risk appetite strengthened. The U.S. midterm outcome improved global sentiment, raising expectations of a more measured approach to trade and tariff policies and potentially supporting foreign institutional inflows into emerging markets, said Vinod Nair, Head of Research at Geojit Investments Limited.

Domestically, hopes of tax relief in the upcoming Union Budget, better-than-expected quarterly results and strong festive demand added momentum to the rally. While earnings visibility and domestic demand are expected to keep the near-term bias constructive, analysts warned that geopolitical risks and crude-oil price volatility could trigger intermittent profit-taking.

In the United States, equities rose as investors anticipated a divided Congress after Democrats secured control of both the Senate and the House, a shift that could temper sweeping policy changes. Large-cap technology stocks such as Amazon, Meta Platforms and Alphabet posted gains, while some data-center firms faced pressure amid concerns over tighter AI regulation.

European markets also advanced, led by banks and clean-energy stocks, after the US election results were announced. The pan-European STOXX 600 index rose nearly 1%, with lender-focused benchmarks in Italy and Spain posting gains of 2.2% and 1.6% respectively.

On the NSE, the most actively traded stocks by value included HDFC Bank, Reliance Industries, Bharti Airtel and MCX India, while Vodafone Idea, Yes Bank and Suzlon Energy led in volume. A number of stocks, such as Emcure Pharma, Dr. Lal Pathlabs and Adani Ports, reached 52-week highs, whereas others like AIA Engineering and Zee Entertainment recorded 52-week lows.

Overall, out of 3,704 stocks that traded on Wednesday, 2,720 advanced, 883 declined and 101 were unchanged, indicating a broadly bullish market sentiment.