The equity markets have been invigorated by the BJP's decisive victory in Maharashtra, which has alleviated concerns about lackluster Q2 earnings. This political shift is expected to stabilize governance in India's most industrialized state and reinforce the BJP's policy continuity.

Public sector undertakings (PSUs) have benefited greatly from this, as investors anticipate a revival in government-led capital expenditure. Analysts from Kotak Institutional Equities suggest that the focus will now be on unblocking stalled infrastructure projects and increasing spending, which could provide a much-needed boost to sectors such as urban development and manufacturing.

However, some sectors, particularly defense and railways, may face challenges due to high valuations that exceed fundamental support. Investors are cautiously optimistic as they weigh the risk-reward balance in the market's adjustment to the new political landscape.