Bulls Stomp the Market on Calls for Ceasefire, US-China Trade Negotiations

On May 12, the Indian stock markets witnessed a significant rally, with the BSE Sensex soaring by 2,975 points (3.74 per cent) to close at a record high of 82,429.90 and the Nifty 50 climbing 865.90 points (3.61 per cent) to finish at 24,873.90.

This surge was primarily driven by the announcement of a ceasefire between India and Pakistan, alleviating geopolitical tensions that had previously unsettled investors. Additionally, positive developments in US-China trade negotiations contributed to improved global market sentiment.

The rally was broad-based, with significant gains in sectors such as financials, IT, and tourism. Notably, small and mid-cap indices outperformed, rising 3.5 per cent and 3.1 per cent, respectively. Major companies like Reliance Industries, Tata Steel, and Mahindra & Mahindra saw substantial stock price increases, further bolstering the market’s upward momentum.

The overall market capitalisation of all companies listed on the BSE swelled by Rs 16,06,576 lakh crore to Rs 4,32,47,426.73 lakh crore on May 12. The figure stood at Rs 4,16,40,850.46 at the day’s end.

The broader markets also joined the chorus. BSE Midcap index jumped 3.85 per cent to settle at 43,731.60, while the BSE Smallcap index soared 4.18 per cent to end at 48,693.75.

In the Nifty 50 index, save two stocks, all were bound northward. Adani Enterprises emerged the top performer, surging 7.7 per cent on May 12. Infosys also recorded strong gains of 7.69 per cent. It was followed by Shriram Finance, Trent and Wipro that gained between 6-7 per cent each. IndusInd Bank and Sun Pharma were the only losers among the Nifty 50 pack of stocks.

It was a day of major gains for all sectoral indices gained today, including the Nifty Pharma index, which suffered hefty losses in the early trading session. Nifty IT emerged as the top performer, surging 6.7 per cent as a US-China trade deal dimmed fears of a recession in the world’s largest economy. Nifty Realty, Nifty Metal, and Nifty Auto were among the other top gainers. Nifty Pharma gained just 0.15 per cent as reports of a possible cut in drug prices in the US by Donald Trump hit the shares of pharma exporters.

Analysts, nevertheless, remain optimistic about India’s economic outlook, with projections indicating a 6.5 per cent growth in FY25-26, supported by resilience to global trade uncertainties and progress in US trade discussions.

Analysts further believe that the sharp rise in the Nifty marks a continuation of the uptrend following a three-week consolidation phase. Having crossed the previous high of around 24,857, the index is now poised to inch towards the 25,200 pivot, while the 24,400–24,600 zone is expected to offer strong support on any dip.

In a note on May 9, Nomura had said that the flaring up of geopolitical tensions with Pakistan over Kashmir was unlikely to affect India’s growth, though there was a tail risk of a broader escalation that could have influenced investor sentiment.

Now investors would be eyeing inflation numbers to be released on May 13 and 14, ahead of next month’s credit policy.

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