People walk past a panel displaying the blue-chip Hang Seng Index outside a branch of China Construction Bank in Hong Kong
People walk past a panel displaying the blue-chip Hang Seng Index outside a branch of China Construction Bank in Hong Kong REUTERS

Asian markets rose Monday as investors were relieved after the pro-bailout parties won Sunday's elections in Greece.

Japan's Nikkei Stock Average rose 1.77 percent or 151.70 points to 8721.02. Among the major gainers were Mitsubishi UFJ Financial Group (3.1 percent), Daiwa Securities (2.7 percent), Nomura (2.6 percent) and Mizuho Financial (2.5 percent).

South Korea's KOSPI Composite Index climbed 1.81 percent or 33.55 points to 1891.71.

The Chinese Shanghai Composite Index rose 0.40 percent or 9.20 points to 2316.05. Hong Kong's Hang Seng climbed 0.95 percent or 181.99 points to 19415.93. Major gainers were Jiangxi Copper Co (2.69 percent), CNOOC Ltd (2.50 percent) and China Shenhua Energy Co Ltd (1.28 percent).

India's BSE Sensex declined 1.2 percent or 203.16 points to 16746.67 as the Reserve Bank of India disappointed the investors by keeping the repo rate unchanged in its mid-quarter policy review Monday. Major losers were United Spirits Ltd (4.1 percent), State Bank of India (3.2 percent) and Ashok Leyland (2.3 percent).

Market sentiments were positive as Interior Ministry of Greece announced that the New Democracy (conservatives) won 29.7 percent of the votes, Syriza (radical left) arrived second with 26.9 percent and PASOK (socialists) third with 12.3 percent. This will mean that ND-PASOK coalition, which supports austerity measures, could secure a 162 seat majority in the Greek parliament.

Markets echoed a sigh of relief on knowing that Syriza, given its unconditional opposition to austerity measures, was not able to attain majority in the election.

The election results provided the much needed respite for the market sentiments, which were under severe stress after the previous Greek elections in May that could not result in forming a government. Investors were worried with the Greek finance ministry indicating that it might run out of money by the end of June if the country receives no further bailout payments.

The market players were concerned that the euro zone policymakers could withdraw the rescue package and refuse to provide emergency loans for the Greek banks until Greece adheres to the bailout terms. Greece would then face devastating bank runs, prompting the collapse of its banking system and an exit from the euro zone.

However, the present results will not alleviate all the concerns of the investors as the main drag on global economic growth continues to be the euro zone crisis. While Germany is contracting only marginally, steep downturns are evident in Spain and Italy, which are faced with increasing borrowing cost.

Investors will be focusing on the G20 leaders' summit in Mexico Monday and Tuesday, where the debt crisis looming over the euro zone will be the main subject of discussion.