(Bloomberg) -- India’s key equity indexes closed at record highs on Thursday, as foreigners pared pessimistic bets following the central bank’s generous dividend to the government and amid hopes for a positive outcome in the ongoing elections.

Foreigners’ net short positions in index futures more than halved to a little less than 100,000 contracts on Thursday as stocks rose, indicating covering of bearish positions on the National Stock Exchange. Meanwhile, provisional data indicates overseas funds bought 46.7 billion rupees ($561 million) worth of shares on a net basis, marking their biggest daily purchase in at least four weeks.

Foreigners’ U-turn on Indian stocks comes after they had withdrawn more than $3.5 billion from the nation’s equity market in May, and raised net short bets on index futures to multiyear highs earlier this month.

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Indian stocks have trailed Asian peers this month amid concerns that Prime Minister Narendra Modi’s party may not secure the landslide victory it aims for in the polls, likely affecting its ability to carry out policy reforms.

The NSE Nifty 50 Index rose 1.6% to close at 22,967.65, while the S&P BSE Sensex climbed by the same magnitude, with both gauges breaking out of a probable double-bottom pattern, signaling further gains in the coming months.

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