Modi, leading the Hindu nationalist Bharatiya Janata Party, scored the biggest election win for 30 years, pledging sweeping reform to create jobs and boost an economy growing below 5 percent - its slowest in more than a decade.
Strong foreign buying has pushed both the Sensex and the broader Nifty up by just over 20 percent so far this year, posting a series of record highs - the latest on Monday - and far outperforming a 5 percent gain in the MSCI Asia-Pacific index excluding Japan.
Foreign investors have bought a net $8.55 billion so far this year, with $3.31 billion coming since the beginning of May.
At $1.52 trillion as of Monday's close, the market value of the National Stock Exchange and the smaller Bombay Stock Exchange makes India the second largest among emerging markets in Asia, ahead of South Korea, but still below the market cap of $2.4 trillion for Shanghai-listed shares, according to Thomson Reuters data.
India's market capitalisation, however, remains below a peak average of $1.82 trillion hit in December 2007, according to data from BSE.
"This is an excellent time to invest, and our belief is that we are in a long-term bull market that is likely to play out in the next 7-10 years," Vijai Mantri, chief executive of Pramerica Asset Management said.
"Along with the strong foreign flows we are also beginning to see domestic flows returning to the market, which is likely to support the rally."
Shares of state-run companies, seen as desperately in need of reform, have rallied the most, with the CNX Public Sector Enterprises Index gaining 22.3 percent since May 15th.
Other gainers include domestic oriented sectors such as infrastructure and construction, along with interest rate sensitive sectors such as banking and automobile company stocks.