The VIX, or the volatility index, dropped by over 27 per cent to 20.15 from the 30 that it had hit on Wednesday when fresh nervousness gripped investors ahead of counting day.
This signals that the market is expecting a stable government with a full mandate.
The Bharatiya Janata Party (BJP) on Thursday appeared set to retain power as its candidates led in 229 of the 405 Lok Sabha seats from where counting trends were available in the morning hours, leaving the Congress far behind.
"Sensex and Nifty could surge by 3 to 4 per cent if the BJP gains over 290 seats," said Deepak Jasani of HDFC Securities.
At 11.07 a.m., the S&P BSE Sensex was up by 695.86 points, or 1.78 per cent, at
39,806.07. It touched a high of 40,124.96 and a low of 39,464.69.
The broader Nifty was up 207.05 points, or 1.76 per cent, at 11,944.95.
Shares of the Gujarat-based Adani group companies, as well of the Reliance group, among few other large caps, logged gains as Prime Minister Narendra Modi was seen retaining power.
"Markets are expected to trade in a wide range of 2-3 per cent before the trends of results come out in the afternoon," said Romesh Tiwari, Head of Research, CapitalAim.
"Consensus on the big upward rally on the victory of the BJP-led NDA can be used for unwinding long positions on market heavyweights like Reliance, HDFC, SBI, among others," he added.
The top five Nifty50 stocks were Adani Ports, Yes Bank, State Bank of India, BPCL and IndusInd Bank.
( With inputs from IANS )