Market analysts and experts remain optimistic about the Indian equity markets reaching new heights, particularly with the Narendra Modi-led NDA government retaining Nirmala Sitharaman as Finance Minister. During her first tenure in this role, the Sensex saw an impressive 93% increase.

According to an Economic Times analysis by Nikhil Agarwal, when Sitharaman initially took over from Arun Jaitley as Finance Minister on May 31, 2019, the Sensex was around the 39,700 mark. Recently, the index hit a lifetime high above 77,000 just before the new portfolio allocations were announced on Monday.

Given this trajectory, market experts have set their sights on the much-anticipated 1 lakh milestone for the Sensex.

Anand Rathi predicts that this target could be achieved by the end of FY28. Additionally, market guru Raamdeo Agrawal recently forecasted a level of 1.5 lakh by 2029, which appears attainable if the Sensex maintains a 15% annual compounding rate and earnings growth supports the current P/E levels of 25x.

Renowned billionaire investor Mark Mobius also maintains a positive outlook on the Indian stock market's growth potential, despite the Narendra Modi-led NDA's weaker mandate in the 2024 Lok Sabha election results.

In an interview with ET, Mobius reaffirmed his previous forecast of the Sensex reaching the 1 lakh mark within the next five years, stating, "We are still on that upward trajectory. There will always be corrections, but we are still in that direction. We will hit that (1 lakh mark for Sensex). Maybe even before five years. India may be an exception in terms of moving faster."

Mobius remains confident in the Indian market's potential to reach new milestones, suggesting that the Sensex could hit the 100,000 mark sooner than initially anticipated due to India's impressive growth rate.

Under Sitharaman's leadership, the stock market achieved several significant milestones, including surpassing the $5 trillion market capitalization mark and seeing the number of demat accounts exceed 150 million. Retail investors showed their strength by absorbing most of the selling pressure from foreign institutional investors (FIIs).

The continuity of key ministries—such as Defence, Home Affairs, Road Transport, Finance, and External Affairs—with the same BJP leaders as in the previous term has been positively received by analysts.

Nomura analysts believe that Sitharaman's reappointment will ensure a continued emphasis on infrastructure and ongoing fiscal consolidation. Initially, investors were concerned about political stability and policy continuity following the election outcome. However, over the past week, these concerns have diminished, with the cabinet composition indicating policy continuity. Nomura expects an improvement in FII flows as policy continuity is established.

Goldman Sachs analysts anticipate that the new government will adhere to the fiscal consolidation path while focusing on infrastructure development, particularly expanding the rail network, with a slight increase in rural spending.

Deven Choksey, a seasoned market expert, views Sitharaman's reappointment as finance minister in the new coalition government as a "wise step" for maintaining the focus on infrastructure development and exports.

Phillip Capital maintains a positive medium to long-term outlook on Indian macroeconomics and equities. They note that the seat distribution reflects optimal continuity and fair treatment of allies, a significant advantage. The brokerage expects incrementally positive FII flows alongside strong domestic flows, given the experienced individuals leading key ministries in the coalition's third term.

Investors are eagerly awaiting the upcoming Union Budget set to be presented in July, viewing it as a pivotal event. As per brokerage insights, the forthcoming budget is poised to offer deeper insights into the objectives and potential of various ministries. While expectations lean towards a social focus, there's also anticipation for sustained capital expenditure and the continuation of earlier policies and reforms.