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Mumbai -India's benchmark stock index raced to a record high on Tuesday as foreign investors bought shares on hopes that a new pro-business government would emerge from elections which start next month.
The Bombay Stock Exchange's (BSE) benchmark index gained 1.06% to touch a lifetime high of 22 040.72 points in morning trading, before closing at 21 832.61 points, 0.10% higher than Monday's closing.
The momentum in markets could last until April with election results in May providing the next set of cues, analysts said.
India's Hindu nationalist Bharatiya Janata Party led by business-friendly Narendra Modi is tipped to emerge as the biggest party in the elections due in April-May, defeating the scandal-tainted ruling Congress party.
Growth slackened last year to a decade low of 4.% and the government expects 4.9%expansion in this fiscal year to March 31.
The results of the general election, to be held in phases, are due in mid-May.
Foreign institutional investors have purchased $7.4bn in local equities and debt so far in the fourth quarter of the current fiscal year, data from the Securities and Exchange Board of India showed.
Maruti Suzuki rose 7.5% to 1 868.85 rupees per share on Tuesday while Financial Technologies gained 4.99% or 18.00 rupees to 378.95 rupees per share.
Some analysts are skeptical about the stock market surge.
"We believe shares are in an extended overbought position, said Rahul Bhandawat, an equity analyst at Mumbai's Equentis Capital.
"Cues from Crimea and the US Federal Reserve decision should not be overlooked, given our linkages with the world economy," Bhandawat added.
Western leaders have announced sanctions against Moscow after Crimea's vote to leave Ukraine and join Russia on Sunday.
Meanwhile, the US Federal Reserve is expected to further scale back its economic stimulus as the world's biggest economy shows signs of stable recovery.
