Markets rally over 1.5% post-Maharashtra elections; experts advise caution amid consolidation

Indian equity indices, the Sensex and Nifty, posted strong gains on Monday, surging over 1.5 per cent after the BJP-led alliance's decisive win in the Maharashtra state assembly elections. The Sensex soared by 1,130 points to trade near 80,330, while the Nifty gained 372 points to touch 24,295 in early afternoon deals.

Election results boost sentiment

The election outcome lifted market morale as investors anticipated increased government spending and a push for rural economic recovery. Motilal Oswal Financial Services noted that favourable monsoon conditions and policy continuity could stimulate economic growth.

Analysts remain cautious

Despite the optimism, analysts at Emkay Global Research highlighted potential fiscal stress due to heightened populist spending in Maharashtra and Jharkhand. The brokerage revised its Nifty December 2025 target to 25,000 from 26,000, citing weak consumption demand and tighter cash flows.

Foreign institutional investors (FIIs) have been net sellers in recent sessions, but experts expect the trend to moderate. The wedding season is also predicted to support consumption recovery, but the recommendation remains on quality stocks with robust fundamentals.

Nifty technical outlook

The Nifty's bounce off the 50-day simple moving average (SMA) and a close above the lower Bollinger Band on weekly charts signal a potential for further upside. A vertical rally towards 25,262 is possible, though analysts caution about resistance in the 24,030–24,420 range. Supports at 23,800 could maintain upward momentum with intermediate challenges at 24,420 and 24,770.

Derivatives action

In the derivatives space, the highest open interest (OI) for weekly contracts is at 25,000 CE and 23,000 PE, while for monthly contracts, it stands at 25,000 CE and 23,500 PE. Significant OI addition was noted at 23,900 CE and 23,700 PE for weekly contracts, indicating key levels to watch.

FII activity showed a 29.54 per cent increase in index futures long positions, a 5.73 per cent reduction in short positions, and a sharp rise in both call and put positions, suggesting hedging activity.

While the market has rebounded strongly, analysts urge caution amid the potential for consolidation. Investors are advised to focus on resilient, fundamentally strong stocks to navigate macroeconomic pressures.