Sensex and Nifty shrugged off the rate hike by Reserve Bank of India (RBI) with the 30-share index rallying as much as 327 points post RBI policy announcement. With the big event now gone, experts believe focus will shift to global cues, even as they observed that markets are still expensive. However, consumption theme looks good, they added. 

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The Sensex ended at 35,178, up 275.67 points, while the broader Nifty50 closed at 10,684, up 91.50 points.

"The two most important things that I observed from RBI policy is i) private consumption in urban and rural India has made a comeback, and ii) output gap has narrowed i.e. capacity utilisation is at high levels, which, with the multiplier effect, will boost private investment as well," said independent market expert Ajay Bagga.

As RBI policy is over, Bagga believes market focus will shift to global cues. 

"It's a relief that the big event is now gone. Investors will now focus on US Federal Reserve's policy review, wherein it is expected to hike rates," he said.

Market expert Anand Tandon, meanwhile, advised investors not to go whole hog on equities. "Just because market has reacted positively to the RBI policy, it doesn't mean one should quickly buy stocks. Don't forget that frontline companies are still expensive, and nobody is interested in those where valuations are cheaper as earnings visibility is yet to come in those counters." 

The expert maintained markets are still expensive and one should not hurry into creating or churning the portfolio. 

Motilal Oswal, Chairman & MD, Motilal Oswal Securities said RBI governor Urjit Patel changed the rate little higher as at this juncture that was the best thing to do. Oswal sees Nifty hitting 11,000 in the short-term, while he advised investing into mid cap mutual funds. 

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"India is in a situation where anything sharp can hurt economy. If we raise the Interest rates too fast and too sharp, and try tightening the money supply, it can hurt the corporate earnings, which are just about on cusp of expanding. Lowering of interest further was not the case at all as global volatility due to crude and rate tightening never offered that option," Oswal said.

 "At current levels markets are looking little expensive but for a reason of expectations of earning momentum kicking in. We think even the mid cap correction is overdone and selectively mid-caps should start stabilizing. It would be a good idea to commit some capital into well managed mid cap mutual funds as the recovery in earnings will bring the quick buoyancy. Broad markets are currently holding well and we think have a case to move higher towards 11k Nifty mark in short term,” he added.