MUMBAI : Indian stocks surged on Wednesday, notching gains for the second-straight day, as investors drew strength from reports that Ukraine may no longer seek membership of the North Atlantic military alliance, a contentious issue in the ongoing armed conflict.

In addition, Russia’s statement that it is not seeking to overthrow the current political leadership in Ukraine raised hopes of crude oil prices cooling if geopolitical tensions ease in the coming days.

The benchmark Sensex and Nifty indices rose 2.29% and 2.07%, respectively.

Alongside, exit poll results of assembly elections in five states reduced some amount of uncertainty. Exit poll results for Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa were released on Monday evening, after the last phase of voting concluded. Several polls have predicted a clear majority for the Aam Aadmi Party (AAP) in Punjab and the Bharatiya Janata Party (BJP) in Uttar Pradesh, Uttarakhand and Manipur, while Goa is expected to see a close fight between the BJP and Congress. The results of the voting will be announced on Thursday.

US stocks jumped and oil prices dropped on Wednesday, as investors bet the impact of sanctions on Russia has already reflected in market prices. The S&P 500 index rose 2.6%, while the technology focused Nasdaq Composite index jumped 3.5%. The Dow Jones Industrial Average advanced more than 2%. Some Asian indices, including Taiwan and Jakarta Composite, gained 0.74-1.13%. However, Nikkei, Shanghai Composite and Hang Seng closed 0.3-1.13% lower on Wednesday. Nevertheless, the opening of the global indices on a very strong note helped maintain momentum in the Indian indices.

In afternoon trade, Nifty built further on its gains, tracking European markets and American index’s futures, said Devarsh Vakil, deputy head of retail research, HDFC Securities. The index reversed its recent downtrend ahead of election results, he added.

Short-covering and buying on dips were also among the reasons attributed by analysts for Wednesday’s sharp rebound. “It was again a sharp relief rally as investors covered short positions on reports of a likely talk between Russia and Ukraine following the fierce battle over the past week", said Shrikant Chouhan, head of equity research (retail), Kotak Securities.

Buying on dips was noticed in heavyweights, defensive stocks such as IT and pharma, and value buying in private banks, said Vinod Nair, head of research at Geojit Financial Services.

Going ahead, analysts will be closely watching for the softening of crude prices, along with rupee movement, which could set the course for the market. On Wednesday, the rupee, at 76.46 to a dollar, was also up 0.46%.

Margin assumptions for this quarter have been somewhat pared, and FY23 EPS assumptions can be expected to be cut by about 0.5% in response to rising commodities prices, said S. Hariharan, head of sales trading, Emkay Global Financial Services. Sectors like IT and financials with a relatively high degree of resilience in terms of earnings impact, as well as the oil and gas sector, are expected to be outperformers, while autos, cement, and consumer staples stocks hold the maximum risk of earnings downgrades, he added.

Foreign portfolio investors remain net sellers, offloading Rs1.07 trillion worth of shares during 2022 till 8 March. Domestic institutions, on the other hand, have bought 884 billion of shares. FPIs were net sellers on Wednesday, too, according to provisional data on the BSE.