"The triggers for further equity action will be the new government's reform agenda. In the immediate term, selection of the finance minister and decision to retain the RBI chief are likely to provide a boost to sentiment and keep the rupee supported," DBS said in a note.
In the run-up to the counting last Friday, the BSE Sensex rallied over 6 per cent to touch a lifetime high of over 25,375 and have been rising since then. Following this many brokerages have set a Sensex target of 28000-29000 and Nifty target of 8,700-9,000 by December.
It also said there cannot be any comparison between the surge in domestic markets after Narendra Modi-led BJP's electoral success with a similar rise in the Japanese markets last year when the Shinzo Abe government came to power and that such comparisons are "misplaced".
"India's comparison with Abenomics' market impact is misplaced...the comparison ignores some ground realities," it said in a note adding the similarities between the country and Japanese experience end with a stable dispensation emerging from the polls.
It said the Tokyo Stock Exchange's benchmark Topix rallied by over 55 per cent in seven months till May 2013 due to a host of other measures and pointed out some contrasts between the domestic condition and those in Japan.
DBS also pointed out that a key reason for the surge in Japan was a full 25 per cent depreciation of the yen and added that in India, the rupee is highly volatile with a bias towards appreciation at present.
"The RBI has shown an inclination to limit currency volatility and restrain one-sided strength in the rupee, albeit is unlikely to prefer a sharp fall in the currency either," it said.
It added that within six months of Abe's win, the Japanese central bank undertook a massive monetary easing to fight problems like deflation, while India presents a contrastic picture with the RBI focussed on taming inflation.
On the issue of stimulus, the options of the government are also limited given the concerns around taming fiscal imbalances, it added.