The Indian stock exchange was suspended after a record leap in response to the decisive general election victory of Manmohan Singh, the Prime Minister.

The rupee also soared, posting its biggest gain in 23 years, as markets responded with relief to the conclusion of elections in the world’s largest democracy.

Last night that Mr Singh’s Congress Party would not need communist support to form a coalition government.

The Bombay stock exchange rose 2,099 points, or 17 per cent, to 14,273 this morning, prompting its suspension for the rest of the session, the lengthiest halt in its history.

The rupee rose 3.3 per cent against the dollar to 47.78 rupees, its biggest advance since March 1986. Communist parties, which had opposed privatisation and pension reform, lost more than half of their seats.

Rajeev Malik, an economist with Macquarie Securities, said: “We believe the election verdict could be game changing for India, as it enhances the scope for significant medium- and longer-term reforms that will boost the sustainable growth.

“This, combined with the ongoing improvements in the Indian economy, will be highly positive for the economic outlook.”

Mr Singh’s coalition won 262 seats, just short of an outright majority in the 543-seat the Lok Sabha, the lower house.

The market reacted positively to the result, which brought hopes that the incoming government would have a clear mandate, without having to keep fractious coalition partners on board.

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