Congress’s victory in the Indian election has earned a strong vote of confidence from investors, as India’s stock market jumped nearly 20% on Monday. The two major broad market indexes – the Nifty and the Sensex – were both up 17% when trading was suspended due to high volumes.

The large cap PowerShares India Portfolio (PIN) opened for trading in the US up 20%., the high dividend WisdomTree India Earnings Fund (EPI) was up 21%, and the iPath India ETN (INP), which follows the broadest possible MSCI index- was up 22%. India ETFs traded in Hong Kong (2836), London (LNFT), and Euronext (XNI) showed similar gains.

Congress’s victory gives a second term for Prime Minister Manmohan Singh to pursue his pro-market reforms. Although its victory was expected, Congress’s margins were unexpectedly large and it will now be capable of governing without giving major concessions to its coalition partners. The Communists – who left the previous Congress led coalition over India’s nuclear deal with the US – saw their seats cut in half. On Congress’s agenda is a further opening of the banking and retail sector, both major gainers today.

The Indian currency also caught a boost, as the WisdomTree Dreyfus Indian Rupee Fund (ICN) was up 5.6% on the day, an astonishing single day rise for a currency. The jump in Indian equities also gave a nice boost to the BRIC (Brazil, Russia, India, China) ETFs today with the SPDR S&P BRIC 40 (BIK) and the iShares MSCI BRIC Index Fund (BKF), both up near 6%.

The Indian market is still 30% off its April 2008 highs, so despite today’s impressive gains the rally in India ETFs may have a long way to go yet.

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