BJP win, Brent crude drop lifts Indian stock market

Early trends showing that the ruling Bharatiya Janata Party (BJP) will come back to power in the key state of Uttar Pradesh, coupled with easing crude oil prices, lifted Indian equity benchmarks on Thursday.

The BSE Sensex and the NSE Nifty rose over 2% in early trade as the BJP was leading in four of the five states which went to polls.

This rally was aided by a sharp correction in crude oil prices after the UAE supported an increase in output. "We favor production increases and will be encouraging OPEC to consider higher production levels," ambassador Yousuf Al Otaiba said in a statement tweeted by the UAE Embassy in Washington.

Brent crude futures slumped 13.2% to $111.14 a barrel – the biggest one-day decline since April 21, 2020.

Banks, FMCG and auto stocks led the rally in domestic markets. Shares of ICICI Bank jumped nearly 5% to ₹700 apiece on BSE in the intraday trade. Shares of Tata Motors, the maker of Nexon EV, soared nearly 7% to ₹434.25 on BSE. Meanwhile, the stock of Hindustan Unilever rose nearly 5% to ₹2,098.

The rebound in the domestic stock market follows strong cues from Asian peers and a positive finish at Wall Street overnight.

Exit polls had predicted landslide wins for the BJP in Uttar Pradesh and Manipur, a majority in Uttarakhand, and a neck-to-neck fight in Goa, while the Arvind Kejriwal-led Aam Aadmi Party (AAP) is expected to form the next government in Punjab.

The domestic benchmarks had closed higher for the second straight session on Wednesday, aided by broad-based buying across sectors a day ahead of state assembly election results in five states.

Brent crude oil prices had skyrocketed to a 14-year high of $140 a barrel on Monday amid speculation that the US is likely to ban oil imports from Russia.

Russia's deputy prime minister Alexander Novak had warned that crude oil prices could hit $300 per barrel if Western countries ban Russian imports.

"It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market," Novak said in a statement on state television. "The surge in prices would be unpredictable. It would be $300 per barrel if not more."

The United States, which announced a ban on oil imports from Russia on Tuesday, has approved a massive $13.6 billion in aid to Ukraine and its European allies.s