Sensex today spikes nearly 3000 points, Nifty nears 25K on India-Pak ceasefire, US-China trade deal

Stock market today: Indian stock market made a stellar comeback in Monday's trade, May 12, following one of its weakest intraday performances in over a month last Friday, after India and Pakistan announced a ceasefire agreement on Saturday. The development boosted market sentiment, which had been weighed down by last week's escalating tensions between the two neighboring countries.

Additionally, easing trade tensions between the US and China, following Monday’s agreement to suspend most tariffs on each other’s goods, further lifted market sentiment, particularly boosting the domestic tech stocks.

These positive developments have allowed the bulls to take full control of Dalal Street, sending both benchmark indices to their largest intraday gains in the last four years and pushing them to a 7-month high. Additionally, the rally has boosted the market capitalisation of BSE-listed companies, pushing it back above ₹5 trillion.

The Nifty 50 ended the session with a 3.8%- or 916.70-point rally at 24,924, while the Sensex closed at 82,429 points, up 2975 points or 3.74% from the previous close. The broader market recorded even bigger gains, with the Nifty Midcap 100 index ending the session with a 4.12% gain, and the Nifty Smallcap 100 index rising 4.27%.

India and Pakistan on Saturday announced that they had reached an understanding to cease all firing and military actions across land, air, and sea, effective from 5 PM that day. Experts noted that despite the hostile environment created by the recent conflict, Indian markets demonstrated remarkable resilience.

With the situation at the borders stabilising, investors returned to equities, fueling a strong rally supported by robust inflows. The recent hostilities were triggered by a terrorist attack in Pahalgam, Indian-administered Kashmir, on April 22, which resulted in the deaths of 26 civilians, mostly tourists.

In response, India launched "Operation Sindoor," targeting militant camps in Pakistan and Pakistan-administered Kashmir. This led to retaliatory actions from Pakistan, including drone and missile strikes, which were completely neutralised by the Indian Army.

Meanwhile, both the US and China announced a trade deal, including a 90-day pause on tariffs and a drop in reciprocal tariffs by 115 percentage points, according to a joint statement released in Geneva. The latest development marks the first step towards de-escalation of trade tensions between the US and China following Donald Trump's reciprocal tariff announcement on April 2.

The deal means reciprocal tariffs between both countries will be cut from 125% to 10%. The U.S.′ 20% duties on Chinese imports relating to fentanyl will remain in place, meaning total tariffs on China stand at 30%. China has lowered the tariffs on US imports to 10%.

Broad-based buying lifts all sectors; IT steals the show with nearly 7% gain

All 13 sectoral indices ended the session in the green, with Nifty IT emerging as the top sectoral gainer, rising 6.70% in its biggest intraday jump in the last five years. Easing global tensions have lifted hopes that the slowdown in the US economy may not be as severe as previously projected. 

Other sectoral indices, including Nifty Realty, Nifty Metal, and Nifty Auto, recorded gains ranging from 3.40% to 6%.

Commenting on today's market performance, Vinod Nair, Head of Research, Geojit Investments Limited, said, "A confluence of positive geopolitical and economic developments—the ceasefire between India and Pakistan, coupled with a breakthrough trade agreement between the US and China—sparked the strongest daily market rally in recent times. The tariff issue had the pivotal role in the stock market's consolidation over the year. Sudden easing of the US-China tariff war unlocked multiple investment avenues for investors".

"Sustained foreign institutional investor (FII) inflows, along with a resurgence in retail participation fueled by expectations of a swift improvement in business sentiment, propelled today's upside. However, while the momentum remains strong, the market may enter a phase of consolidation in the near term as investors await concrete signs of earnings growth. In the meantime, mid- and small caps are expected to maintain the optimism in the broad market," he further added.

Nifty 50 short-term target: Expert predicts it may touch 25,750 

Rupak De, Senior Technical Analyst at LKP Securities, said, "The Nifty witnessed its best day in four years as multiple positive news developments triggered a risk-on sentiment. Technically, the index has broken out of recent consolidation across multiple timeframes, confirming a positive trend. Additionally, it continues to sustain above a crucial moving average. Going forward, any dips are likely to be bought into as long as the index remains above 24,350. On the higher end, this leg of the rally might extend towards 25,350/25,750 in the short term."

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.