When will Sensex, Nifty bounce back to pre-election level? Check top predictions

Historically, has delivered +9%/+8% return in the 3/6 months after Lok Sabha elections since 1991, showing that in the past a correction or dip has typically ended up as a buying opportunity over the longer term.

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analysts are expecting a post-election normalisation of implied volatility in Indian equities, the degree and speed of which will largely depend on the participation of .

"With the election behind us, the Indian is likely to resume its long-standing upward trend. We recommend positioning for potential spot-up and volatility-down scenarios by buying call spreads funded by selling puts," it said.

The global brokerage's preferred strategy is to buy Nifty 27Jun24 23000-24000 call spread funded by selling 27Jun24 20000 put on Nifty.

While JPMorgan's Nifty year-end target remains at 22,000, has retained the view of high single-digit returns with an unchanged target of 23,500.

"The medium-term growth story in India does not change, as strong cycles that have begun are likely to support themselves. The extent and duration of the cycle will become clearer once the new government is sworn in as we look at the 100-day agenda. We retain our modest view for this year with the year-end (Dec 24) target set at 23,500 (remains unchanged). While we see some room for a near-term rebound after Tuesday's sharp correction, the material upside is limited as the fundraising calendar will likely commence after the elections," Bernstein said.

India's rich valuations are a worry for FIIs. At 19x, Nifty remains above its 18-year historical average PE i.e. at 85th percentile and well over 1SD of the average. This also makes India one of the most expensive markets in the world and its premium to Asia Ex-Japan and EM peers is more than 1SD above the historical average.

"One of the arguments behind India's rich valuations has been the political stability/policy certainty afforded by a strong government. Some of those assumptions could now come under question. We remain UW India in an EM context," said.