Indian benchmark indices Sensex and Nifty opened higher on Wednesday, extending their rally for a fifth consecutive session as investors tracked the outcome of the US midterm elections, movements in crude oil prices and foreign fund inflows.
At 9.22 am, the BSE Sensex was trading at 77,237.91, up more than 320 points or 0.42%. The gains followed a strong rally over the previous four sessions, during which both benchmark indices climbed around 5% and closed at their highest levels in nearly two months on Tuesday.
The election outcome is being closely monitored by investors worldwide, as it could influence developments in the Middle East, global energy prices, investment in artificial intelligence (AI) data centres and the United States' fiscal outlook.
These factors are particularly significant for Indian equities, which have faced pressure this year from elevated energy prices and relatively limited exposure to AI-linked stocks.
Foreign investor buying and easing crude prices support markets
A revival in foreign investor inflows has emerged as an important factor supporting the domestic market. Foreign investors purchased Indian equities worth ₹68.37 billion ($721.66 million) on Tuesday, according to provisional data. They have been net buyers in five of the past six trading sessions.
The four-session rally has also been supported by stronger corporate earnings and a decline in crude oil prices, alongside early indications that sustained foreign fund outflows could be slowing.
Brent crude futures were trading around $103 per barrel on Wednesday after touching a nearly four-week low in the previous session. Investors were assessing diplomatic efforts aimed at ending the conflicts in Ukraine and Iran, which have remained important factors influencing global energy prices.
Ponmudi R, chief executive officer of wealth technology platform Enrich Money, said signs of a possible slowdown in sustained foreign fund outflows, easing energy prices and optimism surrounding potential tax-policy developments could support domestic market sentiment.
US midterm results keep global investors on edge
The US midterm elections remained a major focus for financial markets, with investors assessing whether Democrats could wrest control of Congress from President Donald Trump's Republicans.
The outcome has implications beyond American politics, particularly for the direction of US fiscal policy, geopolitical developments and investments in AI infrastructure.
India's relatively limited exposure to AI-linked stocks has also made developments in the sector important for domestic market sentiment. Any changes affecting the expansion of AI data centres could influence global investment flows and technology valuations.