Bulls continued to dominate the market for the second consecutive trading day on Monday, with the indices gaining a new record high from where it ended on Friday.
The BSE Sensex was up 2.42%, or 556.77 points, at its close of 23,551, while the NSE Nifty ended 2.27% higher, or 155.45 points at 7,014.25.
On the last polling day on Monday, most market players turned positive on the possibility of the Bharatiya Janata Party (BJP) forming the government either on its own or with an alliance that could largely comprise independent candidates.
The exit poll later in the evening, pointed towards BJP gaining the desired numbers to form the government. This also saw the Nifty leapfrog by over 125 points on the Singapore Exchange in late trades. The SGX Nifty, at 8.00 pm India time, was trading 133 points, or 1.88%, higher at 7175. Market players said this indicate the continuance of a bull rally on Tuesday as well and the indices were likely to open with an upward gap.
There were two clear signals emerging from the past two days' rally, said a dealer at a fund.
"That BJP will be the single largest party and hence it would be easier for it to form the government. Secondly, the Congress would look better sitting in the opposition as it would find it difficult to form the new government as the numbers do not favour them," he said.
The market is expected to be bullish at least till the results are announced on May 16, said a dealer. However, the rate at which indices would peak may come down going by Monday's trend and that could be the case for the rest of the week, he said.
"The Nifty could rise 5% on Friday if the results show NDA with a clean win of over 272," said U R Bhat, managing director India of UK-based Dalton Strategic Partnership LLP.
Last Friday, the Sensex ended with a gain of 650.19 points at its close of 22994.25, while the Nifty closed 198.95 points higher at 6858.80 as compared with Monday's gain of 556.77 and 198.95 points, respectively. Market analysts now expect Nifty to touch 7400 levels this week.
"The market has been rooting for the victory of National Democratic Alliance which is more than apparent now," said Arun Kejriwal of Kejriwal Research. "Bulls who have the momentum on their side now, will simply not let go," he said.
Foreign institutional investors in the last two trading days have invested close to Rs 2,500 crore in equities.
The glut of foreign currencies in the market strengthened the rupee to a ten-month high of Rs 59.52 to the dollar. The rupee opened flat at 60.05 and weakened to an intra-day low of 60.12 before gaining ground.
"There were government banks buying dollars and absorbing the glut in the market. But it is difficult to conclude whether the demand was on account of client requirements or intervention by the central bank," said a chief dealer at a foreign bank.
Of the 50 stocks on the Nifty, 43 advanced while 7 declined.
Stocks that gained the most were Coal India, at 327.50 was up 6.11%, Power Grid at Rs 11,250 was up 5.29%, Grasim Rs 2,851.60 (up 4.75%), HDFC Bank Rs 791.90 (4.64%) and Hero MotoCorp Rs 2,309.10 (4.14%).