Stock markets rose 3% after a period of significant losses, as investors saw an opportunity to buy undervalued stocks.

On Wednesday, the stock market in Mumbai saw a remarkable rebound after facing a significant decline during the previous trading session due to disappointing poll results. The Sensex and Nifty, the two benchmark indices, recorded a strong comeback with a surge of over 3 percent each.

After the debacle on Tuesday, the BSE Sensex, which is comprised of 30 major companies, jumped by 2,303.19 points or 3.20 percent to settle at 74,382.24. This was mainly due to a surge in investments in the banking, auto, and oil sectors. At one point during the day, it had even soared by 2,455.77 points or 3.40 percent to reach 74,534.82.

Similarly, the NSE Nifty also showed a significant increase by climbing 735.85 points or 3.36 percent to reach 22,620.35. At its highest point during the day, it had soared by 785.9 points or 3.59 percent to reach 22,670.40.

The sharp gains in the stock market were attributed to heavy buying in top companies such as HDFC Bank, ICICI Bank, and Reliance Industries. These companies helped the indices to achieve remarkable gains despite the fact that the ruling NDA is slightly below the majority mark of 272 in the 543-member Lok Sabha. This is the first time since 2014 that the BJP has fallen short of the magic number and will have to rely on its allies for government formation.

The Election Commission has declared the results for all 543 Lok Sabha constituencies, with the BJP winning 240 seats and the Congress winning 99.

Vinod Nair, the Head of Research at Geojit Financial Services, commented on the market's performance by saying, "Indian market exhibited a spirited recovery driven by broad-based buying across various sectors, as political stability appears assured. However, attention will remain on the formation of the government and the forthcoming RBI policy meeting."

All 30 companies in the Sensex ended in the green, with IndusInd Bank recording a jump of over 7 percent. Other major gainers included Tata Steel, Mahindra & Mahindra, Bajaj Finance, Kotak Mahindra Bank, Hindustan Unilever, HDFC Bank, Axis Bank, and JSW Steel.

In a report by Motilal Oswal Research, it was stated that despite the reduced majority, they expect the policy agenda of Modi 2.0 to continue with some changes. They also anticipate some populist measures to be implemented to address rural distress and boost sentiment, given the nature of the election verdict.

In other global markets, Seoul ended with gains while Tokyo, Shanghai, and Hong Kong ended lower. European markets were trading in the green, and US markets ended positively on Tuesday.

The global oil benchmark, Brent crude, also saw a slight increase by 0.14 percent to reach $77.61 a barrel.

According to exchange data, Foreign Institutional Investors offloaded equities worth Rs 12,436.22 crore on Tuesday.

On Tuesday, the markets had their worst trading day in the last four years as the BJP fell short of the majority mark for the first time since 2014. The Sensex plunged by 4,389.73 points or 5.74 percent to settle at a two-month low of 72,079.05. At one point, it had even dropped by 6,234.35 points or 8.15 percent to reach a five-month low of 70,234.43. Similarly, the Nifty also tumbled by 1,982.45 points or 8.52 percent to reach 21,281.45 during the day. It ended at 21,884.50 with a sharp decline of 1,379.40 points or 5.93 percent.

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