Modi sends Dalal Street on Cloud Nine

It was extended Holi rain dance on Dalal Street on Monday as markets euphoric on Bharatiya Janta Party's assembly poll win, broke records,

The Nifty 50 index touched a lifetime high of 9,122.75 in early morning trades, closing over the 9,000 level mark for the first time. The index ended the day 9,087 with a 152.45-point gain.

The 30-share BSE Sensex, which went up 615.7 points intra-day before closing the day at 29,442.63 points with a gain of 496.40 points, however, failed to hit its record 2015 high of 30,024.74.

"The much-awaited breakout beyond the 9000 mark is a reality now and it has happened with a breakaway gap, which certainly augurs well for our markets. Although we witnessed a mild profit taking at higher levels, traders should get encouraged by highest-ever closing well above the 9000 mark," Sameet Chavan, chief analyst- technical & derivatives, Angel Broking.

With uncertainty over government handling of post demonetization blues vanishing, hopes of continued push to economic policy reforms under a favourable environment and the ruling party likely to emerge stronger at the Upper House would push the markets to scale newer highs in coming days, observers said.

"It's raining all the way! The UP state assembly results is a death nail for an opposition and is a new beginning for preparations of the 2019 centre elections. This number will help BJP consolidate their position in Rajya Sabha as well. Mutual Funds and insurance companies have seen large inflows leading to large cash pools in their portfolios. An aggressive deployment will keep the momentum of the market high and will look forward to the FY17 last quarter earnings. We think this momentum is here to stay," Motilal Oswal, chairman & MD, Motilal Oswal Financial Services, said.

Barring the metals index, all other sectoral indices on the National Stock Exchange (NSE) traded with gains.

"The overwhelming mandate received by BJP in the state elections especially Uttar Pradesh and Uttaranchal has paved a path for sustained political stability in the economy along with continuance of the economic policy reforms initiated by the Government, Mayuresh Joshi, fund manager, Angel Broking, said.

Economic indicators and fund flow data would continue to bolster the market in days ahead.

On the macro front, data released on Friday showed that India's industrial production rose by 2.7% in January 2017.

However, inflation based on wholesale prices rose to a 39 month high of 6.55% in February because of pricy food and fuel items.

Foreign institutional investment flows into debt and equity markets has rebounded supporting the markets as well the rupee. So far in March foreign investors have bought a net of $1.5 billion in Indian debt and equity. Debt flows, in particular, have rebounded after selling seen in the immediate aftermath of the government's decision to demonetize high-value notes in November 2016.

FIIs have bought equities worth Rs 412.14 crore on a net level while domestic institutional investors sold Rs 13.91 crore, on March 10, 2017.

Possible volatility ahead on Fed meet is expected, though. A 25 basis point hike by the Federal Reserve in its Wednesday meet is widely expected, and the markets will look to chairperson Janet Yellen's commentary for guidance.

Next to look at is our Reserve Bank of India. "(Wholesale price rise) supports our view that the Reserve Bank of India will have to reverse course and begin hiking interest rates much sooner than is generally expected," Shilan Shah, India economist at Capital Economics, said in a note.