Sensex rose above the 25,000 points for the first time with the Narendra Modi-led BJP winning a thumping victory that saw it gain a majority on its own, which means it won’t be held hostage to the demands of coalition allies and can push forward with an agenda for reform that should set the stage for economic revival.

It’s the first time in 30 years that one party has got a majority on its own. Investors, relishing the prospect of a strong government, sent the Nifty to over 7,200. The BJP has the numbers to form the government on its own but the party is expected to rope in its pre-poll allies in a coalition government.

Domestic-focused shares such as ICICI Bank Ltd and Ambuja Cements Ltd soared, reflecting hopes the BJP and its National Democratic Alliance are best placed to revive an economy growing at its slowest in a decade, while exporters like Infosys Ltd suffered from a stronger rupee.

The wider-than-expected BJP win spurred several investment banks, including UBS and Deutsche Bank, to raise their targets for domestic shares, as they noted indexes are still relatively inexpensive and thus have more room to gain.

As the BJP focuses on reviving growth and investments, it will need to accommodate the RBI, whose Governor Raghuram Rajan has made fighting inflation a priority since taking the helm of the central bank in September.

The BJP will also need to deliver a budget that addresses the fiscal deficit in a way that is credible to investors and rating agencies.

The high markets hopes were reflected by the rally in domestically focused shares that would benefit most from an economic recovery. Analysts said Indian shares were still not too expensive, with UBS estimating the broader Nifty is trading at around its five-year historical average.