The 10-year benchmark government of Indian bond eased 8 basis points.

The rupee ended 48 paise or 0.69 per cent higher at 69.74 per dollar from its previous close of 70.22. Earlier in the day, the home unit advanced by as much as 86 paise or 1.22 per cent to 69.36 against the dollar on Monday, a day after exit polls predicted that the Bharatiya Janata Party-led National Democratic Alliance (NDA) will win almost as many seats as it did in 2014 and form a stable government comfortably. The poll of polls, an aggregate of exit polls, gives the BJP-led National Democratic Alliance (NDA) 302 of 543 seats and the Congress and its allies 122. The equity markets also rejoiced the predictions of exit polls as the Sensex and Nifty 50 Indexes ended at all-time closing highs.

Analysts say that the rupee can appreciate further and move closer to 68 per dollar mark going ahead.

"Most of the exit polls have projected thumping majority for the NDA government. The government has taken bold steps in the last five years. This ensures policy continuity and required stability. Hence it will attract long term investors. So if the exit polls match the actual outcome then the rupee may head towards 68 levels in coming sessions," said Rushabh Maru, research analyst at Anand Rathi Shares and Stock Brokers.

However, AK Prabhakar of IDBI Capital Market advises caution and expects the rally in markets may be short lived as valuations are expensive.

"Any movement in the markets till election results will depend on the positions investors have taken. If there is a huge short position, a rally may be on the cards but it will be short-lived since valuations are not cheap at present," he told NDTV.

Meanwhile, the yield on the 10-year benchmark government of Indian bond expiring in 2029 eased 8 basis points or 1.02 per cent to 7.28 per cent from its previous close of 7.36 per cent.