The Nifty 50 and Sensex opened at record highs on Monday after exit polls suggested Prime Minister Narendra Modi’s ruling Bharatiya Janata Party (BJP) would return to power for the third straight time with a thumping majority.

What Happened: Exit polls predict a clear and comfortable victory for the BJP-led alliance, with estimates suggesting the incumbent government will secure over 350 seats — bettering its 2019 tally. This anticipated win is seen by brokerage firms and market analysts as a significant boost for the Indian economy and stock markets, promising political stability and policy continuity.

Market participants expect short covering from overseas investors at index levels. According to a recent report by CLSA, this narrow, election-themed rally may conclude by June-July.

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Analysts’ Top Picks: Brokerage firms remain optimistic about public sector undertakings (PSUs), railways, infrastructure, and defence stocks, as well as auto, real estate and consumption-driven sectors. They also foresee long-term benefits for water infrastructure stocks, aligned with the government’s focus on existing policies.

Motilal Oswal highlighted that the BJP's victory bodes well for the economy and capital markets, providing stability and continuity in policymaking with a single-party majority government. Recent political uncertainty had caused increased market volatility, but a stable government should ease these concerns, the brokerage said.

Motilal Oswal maintains an overweight position on financials, consumption, industrials and real estate. Preferred investment themes include industrials, consumer discretionary, real estate and PSU banks.

Motilal Oswal’s large-cap picks include ICICI Bank, SBI, Larsen and Toubro, Coal India, Mahindra and Mahindra, Adani Ports, ABB India, HPCL and Hindalco. In the mid-cap segment, the firm prefers Indian Hotels, Godrej Properties, Global Health, KEI Industries, PNB Housing, Cello World and Kirloskar Oil.

Price Action: The Nifty 50 was up 2.68%, coming off a record high at open, while the Sensex was up 2.6%.

All Nifty sectoral indices were up on Monday, with the PSU banks index gaining 4.37% and the oil and gas index up 3.94%.

The morning session’s top gainers were Adani Ports, Adani Enterprises and Shriram Finance.

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