Domestic equity markets managed to extend gains to a third straight day as investors around the world awaited the outcome of US presidential election. World markets recovered early nervousness to push higher as US President Donald Trump and Democratic rival Joe Biden appeared to be in a tight race for the White House, while the dollar appreciated nearly 1 per cent against a basket of currencies and bonds jumped as Mr Trump falsely claimed victory shortly after Mr Biden said he was confident of his win. Analysts, however, say that any outcome will only have a limited impact on domestic benchmarks in the near term.
Mr Trump said his lawyers would be taking his case to the US Supreme Court, without specifying what they would claim.
Benchmark indices S&P BSE Sensex and NSE Nifty 50 climbed up 0.88 per cent and 0.80 per cent, to settle at 40,616.14 and 11,908.50 respectively.
Analysts, however, remained optimistic about the possible outcomes of US presidential elections, saying that a Trump or a Biden win would be positive for India.
"Trump or Biden, it will not be a big difference for Indian markets... since both the US parties are bullish on India," Kochi-based Geojit Financial Services' head of research, Vinod Nair, told NDTV. The US is the fifth largest investor in India, according to the government's National Investment Promotion and Facilitation Agency.
A big stimulus is expected in the US after the election regardless of who wins, he added. "That will be very positive for world economy and emerging markets... India will garner good FIIs (foreign institutional investor) inflows."
However, some even say a Trump loss could cause some correction in domestic benchmark indices.
"A Trump win is positive for India on the foreign policy front, considering his stance on China... In the last one year, he (Trump) has been more aggressive on China," AK Prabhakar, head of research at Mumbai-based IDBI Capital Markets, told NDTV.
"On the contrary, while a Biden victory may lead to a softer foreign policy, his stance on H-1B visa or foreign students may have a positive impact on Indian IT stocks," he added. "In either case, Indian markets may not read too much into US elections, except a Trump loss might lead to some correction."
The rupee weakened 0.46 per cent to settle at 74.74 against the dollar, as the greenback strengthened against six other currencies, giving a boost to export-heavy sectors such as IT and pharmaceuticals. Companies in the two spaces draw the majority of their revenue from foreign markets.
The Nifty IT index - all 10 of whose components ended higher - rose 1.78 per cent, boosted by heavyweights TCS, Infosys and Wipro, which climbed up 0.85 per cent, 3.03 per cent and 2.28 per cent respectively.
"The trend of dollar is likely to be weak in the short-term irrespective of who wins the election because of the big stimulus plan. The trend will get more weak if Democrats gets a stronghold since they are more supportive of a large stimulus package than Republicans," Mr Nair said.
Crude oil rates soared nearly 3 per cent, extending an uptrend on top producers' pact to tighten supply. A Trump victory is viewed as bullish for oil because of sanctions on Iran and his support for Saudi-led oil production cuts to support prices. India meets more than 80 per cent of its oil requirement from imports.
Global markets had begun Wednesday fluctuating between gains and losses, but investors soon digested possible outcomes. MSCI's International World index was last seen trading 0.33 per cent higher, while its Emerging Market gauge was up 0.59 per cent.
"The next 24 hours are crucial and markets are waiting to see if Trump will follow through on his threat of legal action if there is a contested election," said Ajay Bodke, CEO of Mumbai-based Prabhudas Lilladher.
(With inputs from agencies)