Sensex Has Increased by 5,000 Points Since Poll Results: Why?

Following a market-wide rise and the release of the Lok Sabha election results on June 4, the benchmark Sensex has increased by more than 5,000 points. The 30-share Sensex is up about 5% on a monthly basis in June. 
At 3:15 pm on Thursday, the Sensex continued its upward trend for a sixth day in a row, closing at 77,475.08, up 137.48 points (0.18%). 

The improvement in market mood over expectations of political stability, policy consistency, strong economic growth, a robust monsoon, and decreasing inflation is driving this rise.
On the day of the poll results, there was a significant selloff in the market caused by foreign institutional investors (FIIs).

NSDL data indicates that in May, foreign portfolio investors (FPIs) sold Indian stocks valued at ₹25,586 crore. Nonetheless, during the month, they made investments in debt and debt-VRR securities from India. Thus, last month's net FPI outflow was ₹12,911 crore.

Now, the tendency has changed. With ₹12,873 crore invested in the stock market by FPIs thus far in June, the economy appears to be doing well.
The market is currently focused on the impending Budget and policy choices. Experts are optimistic about the equity market for the medium to long term, despite the possibility of short-term volatility. This is due to factors including reducing inflation, an above-average monsoon forecast, and the likelihood that the rate-cutting cycle will begin by year's end.

Concerns about the market's premium valuation still exist. With no new trigger, the Sensex is currently at a record-high level. The index's price-to-earnings ratio (PE) is at 23.5, just shy of its one-year average PE of 24.

Even hotter are the mid- and small-cap groups, where many experts predict froth growing. The BSE Midcap index has risen more than 7% in June thus far, while the BSE Smallcap index is up 10%.