Indian equities experienced a sharp surge on Monday, May 12, 2025, fueled by an India-Pakistan ceasefire and positive global signals, including progress in US-China trade talks. The BSE Sensex opened with a gain of 1,511.33 points (1.90%) at 80,965.80, while the Nifty50 rose by 506.90 points (2.11%) to 24,514.90.

Foreign Institutional Investors (FIIs) had net sold Indian equities worth Rs 3,798.71 crore on May 9, while Domestic Institutional Investors (DIIs) net bought equities worth Rs 7,277.74 crore on the same day. Top gainers in the Nifty50 pack included Jio Financial, Shriram Finance, Axis Bank, Bajaj Finance, and Trent, while Cipla lagged. The India VIX, which had previously climbed due to Indo-Pak tensions, decreased by 20% during Monday's trade.

Sectorally, Realty, financial services, and metals led the gains, while the pharma index was the only sector to decline, dropping over 2%. This decline followed US President Donald Trump's announcement of an executive order to reduce US drug prices.

Key stock-related news included Padget Electronics (a subsidiary of Dixon Technologies) signing a deal with NxtCell India to manufacture smartphones for Alcatel, Jayesh Sule stepping down as Director and CEO of Protean eGov, and Jana Small Finance Bank facing a penalty of Rs 1 crore by the RBI for violating banking rules. Additionally, Tata Steel shares were in focus ahead of their earnings report.

Asian markets also showed positive momentum, influenced by the India-Pakistan ceasefire and progress in US-China trade talks. The MSCI Asia Pacific ex Japan index traded with a gain of 0.6%.

The Indian equity benchmark indices, Nifty50 and BSE Sensex, rallied strongly, with Nifty50 exceeding 24,700 and BSE Sensex crossing 81,800. At 11:04 AM, Nifty50 was at 24,684.35, up 676 points (2.82%), and BSE Sensex was at 81,620.63, up 1,166 points (2.73%).

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that the ceasefire between India and Pakistan paved the way for a sharp market rally, driven by sustained FII buying. Expectations of high GDP growth, earnings revival in FY26, and declining inflation and interest rates further supported the rally. Large caps like ICICI Bank, HDFC Bank, Bajaj Finance, RIL, L&T, Bharti, Ultratech, M&M, and Eicher were expected to lead, with midcap IT and digital stocks also being monitored. Pharma stocks faced near-term pressure due to President Trump’s announcement.

Rumors of an impending US-China trade deal added to the positive sentiment, although its impact on India was viewed with caution. The total market value of BSE-listed companies increased by Rs 11.1 lakh crore to Rs 427.49 lakh crore.

The market surge was attributed to five primary factors: the India-Pakistan ceasefire reducing uncertainty, improved global risk sentiment following US-China trade discussions, record SIP investments, a broad market rally across sectors, and advancing petroleum prices due to trade prospects.

The Sensex's jump of over 2,300 points and the Nifty surpassing 24,600 were fueled by easing India-Pakistan tensions, progress in U.S.-China trade talks, strong SIP inflows, and a sovereign rating upgrade. Broad-based buying and technical breakouts further contributed to the momentum. The BSE Sensex eventually rose 2,376 points (2.88%) to 81,830.65, and the Nifty50 surged 705 points (2.94%) to 24,713. The market capitalisation of all listed companies on the BSE increased to Rs 427.49 lakh crore.

Morningstar DBRS upgraded India’s sovereign credit rating to BBB (Stable), citing improved macro fundamentals, signaling confidence in India’s economic trajectory. All major sectoral indices, excluding pharma and healthcare, opened in the green, with Nifty Realty leading gains. Shrikant Chouhan from Kotak Securities highlighted key technical levels for the Nifty. Crude prices edged higher on optimism around U.S.-China trade discussions.

Analysts remain cautiously optimistic, noting the uncertainty of the India-Pakistan ceasefire and evolving global developments. Level-based trading was recommended for short-term traders.