India’s (SENSEX) benchmark stock index surged to a record and the rupee climbed to a four-month high after the nation’s main opposition party won the state polls.

The S&P BSE Sensex jumped 1.6 percent to 21,326.42 at the 3:30 p.m. close in Mumbai and the currency touched 60.8475 per dollar, the strongest level since Aug. 12. ICICI Bank Ltd. (ICICIBC) soared 5.1 percent, sending a gauge of 13 lenders to its highest level since June.

Victories by the Bharatiya Janata Party in areas holding about a sixth of the nation’s 1.2 billion people would give it momentum to end the ruling Congress party’s decade-long rule in polls due by May and install Narendra Modi as prime minister. Gujarat, Modi’s home state, recorded annual economic growth of 10 percent, lured investments by companies from Ford Motor Co. to the Tata Group and raised power-generation capacity more than fivefold since he became chief minister in 2001.

“Markets are giving a thumbs-up to the poll results,” Nirmal Jain, chairman of Carlyle Group LP-backed India Infoline Ltd., told Bloomberg TV India today. “Investors are looking at the probability of a new government coming in with a decisive mandate in next year’s elections. Foreign inflows will increase and the rupee will appreciate.”

The wins will boost the Sensex by as much as 6 percent by year-end, according to the average of 10 estimates compiled by Bloomberg last week. The gauge has risen 9.8 percent this year, the top performer among the four largest emerging markets, as growing exports boosted earnings and stimulus from the Federal Reserve spurred foreigners to pour almost $ 18 billion into the nation’s $ 1.1 trillion stock market. That’s the biggest inflow in Asia after Japan, data compiled by Bloomberg show.

‘Dramatic Change’

“Foreigners will see a fresh story in India, something quite dramatic in terms of potential change, and would want to follow it up with capital,” Gary Dugan, chief investment officer for Asia and the Middle East at Coutts & Co., said on Bloomberg TV India today.

The BJP wrested power from Prime Minister Manmohan Singh’s Congress party in both the western state of Rajasthan and the capital New Delhi, where the upstart Aam Aadmi Party is a close second. The BJP also secured another term in Madhya Pradesh and Chhattisgarh, according to the Election Commission of India.

The state polls are the final test for the nation’s two major parties before the national vote.

The rupee rose 0.5 percent to 61.1350 per dollar. Ten-year bonds fell, with yield on the 8.83 percent notes due November 2023 climbing five basis points, or 0.05 percentage point, to 8.90 percent. The rate earlier touched a low of 8.8 percent.

‘Pivot Point’

“Risks seem to be skewed that the rupee will break 61 and stay there as state election results are seen as a positive,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. in Singapore. “India is at an important pivot point.”

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell two basis points to 12.13 percent.

Three-month offshore non-deliverable rupee forwards advanced 0.5 percent to 62.29 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

ICICI Bank climbed to 1,201.70 rupees, its highest level since May 29 and the best performer on the Sensex. HDFC Bank Ltd. (HDFCB), the biggest lender by market value, gained 2 percent and State Bank of India rose 1.7 percent.

Larsen & Toubro Ltd. (LT), the nation’s largest engineering company, jumped to its highest close since Aug. 2. Carmaker Maruti Suzuki India Ltd. (MSIL) rallied 3.7 percent to a record. Oil & Natural Gas Corp. (ONGC), the largest state explorer, increased 3.7 percent, the most since Sept. 19.

Jindal Steel & Power Ltd., controlled by billionaire lawmaker Naveen Jindal, tumbled the most since Aug. 30 and the worst performer on the MSCI Asia-Pacific index. Axis Bank Ltd., which gained 1.9 percent today, will replace the metal producer on the Sensex from Dec. 23.

The 50-stock CNX Nifty Index surged to a record 6,363.90.

To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at; Jeanette Rodrigues in Mumbai at; Shikhar Balwani in Mumbai at

To contact the editor responsible for this story: Michael Patterson at