The surge in global markets on Thursday lifted Indian equities as well, with the benchmark Sensex soaring 1.8% and erasing all its losses for the year, even as the US stares at a divided Congress and uncertainty over the outcome of the presidential election.

The return of the benchmark index to positive territory also came on the back of better-than-expected goods and services tax (GST) numbers and other macroeconomic indicators, and a revival in quarterly earnings and a surge in auto sales in the festive season.

Both the Sensex and the Nifty indices have gained for four straight sessions now, advancing 1,726 points or 4.35%, and 477 points or 4.1%, respectively. So far this year, the Sensex has gained 0.21% while the Nifty is still down 0.40%.

At closing, the Sensex settled at 41,340.16 while the Nifty stood at 12,120.30, closing at a level last seen on 19 February. Both indices closed 1.78% higher each, their biggest gains since 25 September.

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Graphic: Mint

“After last week’s weakness, our markets stabilized this week and in fact, it just took off in the last three days. This is mainly on the back of strong recovery in US markets ahead of the US election verdict, as the market seems to have absorbed most of the uncertainty from the event,” said Sameet Chavan, chief analyst, technical and derivatives, at Angel Broking.

To be sure, while the Sensex has recouped year-to-date losses, it is yet to regain its all-time high of 42,273.87 points clocked on 20 January this year.

On Wednesday, Democrat Joe Biden won Michigan and Wisconsin, putting him closer to taking the White House from President Donald Trump. Meanwhile, Republicans appeared poised to regain control of the US Senate.

“A divided US government is likely to be a favourable outcome for most asset classes”, said Deepak Jasani, head of retail research, HDFC Securities. “If Republicans hold the Senate, they will want to stop what they see as Joe Biden’s ‘spending agenda’ and ‘runaway federal debt’, which will mean less fiscal stimulus and no corporate tax increases”, Jasnani added.

According to brokerage firm Nomura Research, a Biden win without full Senate support also means less risk of regulation or higher corporate/personal taxes.

Back home, gains in the domestic market have also been supported by recent better-than-expected GST numbers, quarterly earnings and surge in auto sales data. The continuous fall in covid numbers also improved sentiments.

Anirudh Laskar contributed to this story.

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