Following a period of heightened tensions and military actions between India and Pakistan, a ceasefire agreement has been reached, potentially bringing a sense of relief to the Indian stock market as it opens on Monday. The market had previously reacted negatively to the escalating conflict, but the de-escalation is expected to bring a positive turnaround.

Recap of Recent Market Performance

The week leading up to the ceasefire saw Indian benchmark indices, such as the BSE Sensex and NSE Nifty, experiencing declines of around 1.4% amid growing geopolitical tensions. On Friday, May 9, 2025, Nifty declined by 1.1% to close at 24,008, with selling pressure seen across various sectors. The BSE index also dropped by 1047.52 points (1.30%) on a weekly basis, closing at 79,545.47. This downturn also impacted midcap and smallcap indices. This decline translated to a significant loss in market capitalization, with Indian equities losing an estimated ₹7.1 lakh crore over two trading sessions. The volatility index, India VIX, a measure of market fear, surged to its highest level in a month, closing 2.97% higher at 21.63.

Anticipated Market Rebound

The announcement of a ceasefire is expected to calm the markets when they resume trading on Monday. Experts suggest that the de-escalation of geopolitical tensions typically leads to a relief rally in the Indian stock market. The successful execution of "Operation Sindoor" by the Indian Army and the subsequent ceasefire are expected to instill confidence among investors. This also raises expectations that Friday's market decline, caused by Indo-Pak tensions, will be reversed.

Factors Influencing Market Sentiment

Several factors are likely to influence market movement on Monday:

• Ceasefire Agreement: The resolution of tensions between India and Pakistan is the primary driver for positive market sentiment.
• DGMO Talks: The Director General of Military Operations (DGMO) from both countries are scheduled to hold talks on Monday, which could further solidify the ceasefire and boost investor confidence.
• Economic Data: The release of macroeconomic data, including the Consumer Price Index (CPI), Wholesale Price Index (WPI), and trade figures for exports and imports, is expected on Monday, which will influence market sentiment.
• Global Cues: Global events and market trends will continue to play a role in shaping the Indian stock market's performance.

Expert Opinions

Equity Strategist at WealthMills Securities, Kranthi Bathini, believes that the India-Pakistan de-escalation is positive news for stock investors and expects a positive market move in the short run. He notes that the market dislikes uncertainty and the focus will likely shift back to the growth agenda. Amar Ambani, Head of Research at YES Securities, echoed this sentiment, anticipating that the news should cheer the market on Monday.

Bullion Market Impact

The tensions between India and Pakistan also impacted gold and silver prices, with increases observed in Jaipur's market. However, with the easing of tensions, a price correction is expected in the bullion market this week.