Market bulls are primed for trading on Monday following the good show by the BJP in the state elections, with the Nifty likely to scale fresh highs.

A renewed rally with the BJP wins in Chhattisgarh, Madhya Pradesh and Rajasthan will be balanced by expectations on global cues and the monetary policy committee (MPC) decision on Friday.

Market circles said they were surprised by the results as the BJP performed better than expectations set out by most of the exit polls.

The results will give more confidence to the ruling party and its cadres in the run-up to the Lok Sabha elections to be held in 2024.

The analysts said the voters gave decisive mandates in all four states — the results were also announced for Telangana, where the Congress got a majority — and not a fractured verdict, which could give way to political stability.

Had the BJP performed poorly, it could have forced the central government to resort to aggressive populist policies.

Sunil Nyati, managing director of Swastika Investmart, said such a performance from the BJP in three Hindi heartland states was not anticipated by the markets.

``The Indian stock markets had started factoring in an edge to the BJP in state elections, but 3-1 was not discounted. Therefore, the market is likely to celebrate with big gains. It has already started the pre-election rally for May 2024 from mid-November, and now this rally will get pace after the outcome of state elections.’’

"Now two factors will play out FOMO and TINA. The feeling of missing out (FOMO) and the fact that there is no alternative (TINA),’’ Nyati said.

He said there is a good possibility the Nifty may hit the 21000 mark in December itself, while there could be another 1000–2000 point rally in the index ahead of the 2024 general elections.

On Friday, the Nifty had rallied 134.75 points or 0.67 per cent to end at an all-time high of 20267.90.

Records were also set earlier during the session when the 50-share index touched an all-time intra-day high of 20291.55. The possibility of the intra-day record again being broken on Monday is not being ruled out.

Dhiraj Relli, managing director and chief executive officer, of HDFC Securities, said the election results indicate more uprun in the markets. He, however, cautioned that the markets could witness some profit-taking at higher levels with a key event now over.

"A new bull phase with clear support for growth awaits the market following a strong mandate for the ruling party at the Centre in three out of four state poll results," said Prashanth Tapse, senior VP (Research), Mehta Equities Ltd.

"A stable political environment could further boost investors' confidence and drive the markets higher, with the possibility of benchmark Nifty attaining 20500-20800 levels going ahead appears bright."

Another development which investors will watch out for is the three-day MPC meeting which begins on Wednesday.

The unanimous expectation is the RBI will leave the policy rates unchanged.Though a rate cut from the RBI is not expected at least till the beginning of the next fiscal, the tone of the central bank on inflation and interest rates will be keenly tracked.