A post-poll party is on cards. Address: Dalal Street

Mumbai: Indian equities are poised to build on Friday's surge-the third-strongest in a day in 2024 so far -as the Bharatiya Janata Party-led coalition's convincing victory in the Maharashtra elections over the weekend could fuel the renewed bullish momentum. The BJP's better-than-expected performance in a key state after a disappointing show in the April-June general elections bodes well for investor sentiment, which has been dented due to slowing corporate earnings growth, signs of China's resurgence and the outcome of the US presidential elections, investors and analysts said.

"The Maharashtra election was a litmus test for the BJP, especially after the disappointment in the general election," said Niket Shah, CIO, Motilal Oswal Asset Management. "Maharashtra is an important state, considering it is the largest contributor (13% of India's GDP) and the hub of equity markets, and the BJP's landslide victory is expected to boost investor sentiment."

Eye on Overseas Investors

"The markets were raring for an opportunity to move higher, and the Maharashtra election outcome is likely to be that trigger, but it is largely a sentimental flip," said Rohit Srivastava, founder, indiacharts.com. "An oversold market feeds on itself and the short covering Friday was just the beginning."

Srivastava said the markets were waiting to move up but news of the Adani corruption indictment had dampened investor sentiment last week. Seven out of 11 Adani Group stocks rose on Friday, recouping some of the previous day's losses, when they had plummeted 6-24% in response to the US indictment against Gautam Adani and others over bribery charges.

"The Adani indictment news is not behind us yet as investigations are going on, but the market is expected to react as and when further news flows come in, rather than be haunted by it on a day-to-day basis," said Srivastava.

Whether the market can extend the newfound strength also depends on overseas investors, who have been on a selling spree in Indian equities in the last two months. Some expect a slowdown in activity in December and early January-when several overseas fund managers are absent over the holiday period-to fuel an upmove as domestic institutions remain buyers.

Srivastava is betting on the Nifty to regain 24,500, following which it could touch 25,150 by the end of December. "Foreign investors are also likely to perceive the outcome (of the Maharashtra elections) favourably and that could lead to a slowdown in the selloff," said Shah.