The Indian stock market experienced a significant surge on Monday, May 12, 2025, as both the Sensex and Nifty indices opened strongly in the green. This positive movement was largely attributed to the ceasefire agreement between India and Pakistan, which eased geopolitical tensions that had been escalating for days.
The Bombay Stock Exchange (BSE) Sensex soared over 1,800 points, while the National Stock Exchange (NSE) Nifty 50 index also jumped considerably, crossing the 24,500 mark. Specifically, the Sensex was trading 1,845.75 points higher at 81,300.22 at 9:22 am, while the Nifty50 jumped 565.55 points to trade at 24,576.35. Some reports indicated the Sensex zoomed over 2,000 points and the Nifty surpassed 24,600.
This surge marks a significant turnaround after a period of market decline fueled by fears of escalating conflict with Pakistan. The recent hostilities, which were the most serious in nearly 30 years, began when India targeted locations in Pakistan in response to an attack in Kashmir.
The ceasefire announcement brought a sense of relief to the markets and diplomatic circles. The agreement, formalized after talks between military officials from both countries, followed India's retaliation against a terror attack in Pahalgam.
The positive market sentiment was further boosted by positive developments in US-China trade relations. Both countries signaled "substantial progress" in trade negotiations in Switzerland, boosting investor appetite for risk. US Treasury Secretary Scott Bessent described the meetings as “highly productive,” while China's Vice Premier He Lifeng said they reached an “important consensus”.
The overall market breadth was positive, with a majority of stocks advancing. The Nifty 50 saw 48 of its stocks in the green, and nearly all major sectors posted gains. Broader indices, including small- and mid-cap stocks, also experienced gains.
Top gainers in the Nifty 50 included Adani Enterprises, Jio Financial Services, and Adani Ports. Banking stocks also performed well, with the Nifty Bank index rising significantly.
The India VIX, an indicator of market volatility, eased, further contributing to the positive sentiment.
However, analysts are advising traders and investors to remain cautious and monitor geopolitical developments closely. Renewed escalation between India and Pakistan could negatively impact market sentiment, while continued de-escalation could drive further market recovery. Experts suggest that long positions should only be considered above 24,500 in Nifty and 55,000 in Bank Nifty, with protective puts in place.
