The bellwether stock indices spiralled to record highs on Thursday as investors shook off their fears about the poll outcome, soothed by Prime Minister Narendra Modi’s renewed bluster about a landslide win for the BJP on June 4 when the election results will be announced.

The wave of euphoria fed a stock buying binge, underpinned by the renewed faith that the new government would be able to cap its fiscal deficit at 5.1 per cent — as projected in the interim budget for 2024-25 presented in February — after the Reserve Bank of India opted to pay out a mammoth ₹2.1 trillion dividend to the Centre.

At Dalal Street, the 30-share Sensex regained the 75000 level and finished at a record high of 75418.04, a massive gain of 1196.98 points or 1.61 per cent over the last close.

During the day, it vaulted 1278.85 points or 1.72 per cent to reach an all-time intra-day peak of 75499.91.

The Nifty also came close to the 23000 mark as it jumped 369.85 points or 1.64 per cent to 22967.65. During the day, it zoomed 395.8 points or 1.75 per cent to touch a record intra-day peak of 22993.60.

This sudden bout of bullishness comes at a time opinions remain divided on where the markets are headed.

A Reuters poll of 26 equity analysts conducted between May 14 and May 22 has forecast the Sensex will add 8 per cent to reach 80120 by the end of this year.

The gauge will add 4 per cent to reach 83300 by mid-2025. These estimates were higher than the median predictions of 78550 and 80920 in a February poll.

An analyst from a foreign brokerage said the concerns of expensive valuations are largely in the small and mid caps, and large caps have relatively underperformed.

He added that there is more room for upside in these counters if the economy does well.

Other view

A recent report from Kotak Institutional Equities (KIE) flagged lofty valuations as a headwind, blamed for the persistent selling by foreign portfolio investors (FPIs).

``Valuation methodologies have low or no linkage to fundamentals, which makes high multiples palatable, no matter how outrageous,’’ the brokerage said.

The present benign mood among investors has resulted in a much higher number of high P/E (price to earnings multiple) of companies compared with the past.

Kotak said nine firms were trading above 100-times P/E multiple (12-month forward), while 104 companies are trading more than 50 times PE.

Recently, stocks have been hit by election uncertainties with apprehensions growing in the minds of investors that the BJP is unlikely to get more than 400 seats.

Market circles, however, added that there has been an improvement in the sentiment after the fourth phase.

Apurva Sheth, head of market perspectives and research, Samco Securities, said RBI’s record dividend and Modi’s claim the NDA has already crossed the majority and is on track for a historic victory are the two reasons for the stellar rally on Thursday.

``The Indian markets were lagging behind their peers mainly due to election-related uncertainty. As we move into the last two phases of the election, the uncertainty seems to be reducing and confidence in the current dispensation continuing is growing. This has led to filling of this gap and pushed the markets to new highs,’’ he said.

Neeraj Chadawar, head — fundamental and quantitative research at Axis Securities — said the RBI’s dividend payout saw an enthusiastic response from the markets.

``If the election outcome aligns with current market expectations, we expect Nifty to reach new highs in the first week of June.”