NEW DELHI - A decisive four-state win has given India's main opposition party, the Hindu nationalist Bharatiya Janata Party (BJP), a massive boost ahead of next year's general election, bolstering the prospects that its pro-business prime ministerial candidate Narendra Modi could come into power next year - an outcome that cheered the markets.
The benchmark Sensex index rose 487 points Monday to 21,483.74 points, and the rupee strengthened to a four-month high on the back of the BJP's sweep in the local elections. The results were announced on Sunday.
The BJP, which is seen to be more business-friendly than the ruling Congress party, won in the states of Rajasthan and Madhya Pradesh by massive margins. It also inched past Congress in Chhattisgarh.
In Delhi, the BJP emerged as the largest party even though it was still a few seats short of forming a government. This has raised the possibility of another election in the Indian capital city.
The fledgling Aam Aadmi, or the Common Man party, made a stunning political debut by coming in a close second behind the BJP in Delhi's state elections.
Congress, which has been in power in the Indian capital for 15 years, dropped to third place.
But the ruling party retained power in the small north-eastern state of Mizoram.
Political analysts say the Congress party is in serious trouble ahead of next May's general elections.
"There is an anti-Congress or anti-incumbency wave," said Uttar Pradesh-based political analyst Sudhir Panwar with the Lucknow University.