Indian equity markets erupted in a broad-based rally on Monday, with the BSE Sensex surging over 2,000 points to cross 81,300 and the NSE Nifty50 comfortably breaching the 24,600 mark. The bullish sentiment was driven by easing geopolitical tensions following a formal ceasefire agreement between India and Pakistan and positive cues from global markets, including progress in US-China trade talks.
At close, the Sensex skyrocketed over 2,000 points while the Nifty50 settled above 24,600, both indices posting gains of more than 2% each, snapping a three-day losing streak and reversing the drag caused by recent border hostilities.
Key Drivers Behind the Sensex Rally
The markets reacted strongly to the weekend announcement of a ceasefire between India and Pakistan after days of escalating military action across the Line of Control. The de-escalation brought much-needed relief to jittery investors and triggered a sharp decline in India VIX, which fell by nearly 19%, signaling a drop in market volatility.
The rally was further boosted by renewed optimism in global markets. Investors took heart from positive developments in US-China trade negotiations, which raised hopes of easing international tariffs. Asian markets mirrored this sentiment with strong early trade performance, adding to the bullish tone in Indian equities.
Broad-Based Gains Across Sectors
Market breadth was overwhelmingly positive, with 48 of the Nifty 50 stocks ending in the green. All major sectoral indices logged strong gains, with particular strength in banking, infrastructure, and realty counters. Midcap and smallcap indices also rallied, each gaining around 3%, indicating broad-based investor participation.
Among the top gainers, Reliance Power hit the upper circuit with nearly 10% gains, while Yes Bank soared following news of Japanese lender Sumitomo Mitsui’s decision to acquire a 20% stake in the bank, signaling increased confidence in India’s financial sector.
Foreign Investors Return to Indian Equities
Foreign Institutional Investors (FIIs), who had turned net sellers earlier this year, appear to be regaining confidence. Data showed that FIIs were consistent net buyers through 16 sessions until May 8, before briefly pausing amid the escalation. Analysts expect renewed inflows now that stability appears restored.
Outlook
Analysts believe that the rally would be intact in the short term on the strength of strong domestic macroeconomic data, relief from inflation, and continued corporate earnings resilience. However, they warn that key global risk drivers like US inflation readings and central bank policy cues remain in the background.
The stunning rally is a massive boost to sentiment among investors, especially after weeks of indecision. As geopolitical tensions dissolve into cautious optimism, Monday’s rally can well be the beginning of a more stable cycle for Indian markets, if the ceasefire holds and macro fundamentals remain supportive.
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