Key Takeaways
- Sensex and Nifty Soar to Record Highs in their biggest-ever single-day gains, fueled by the India-Pakistan ceasefire and a landmark US-China trade agreement.
- Market sentiment surged nearly 4% on Monday as geopolitical tensions eased and economic optimism returned.
- Among the leading companies that drove the rally were Infosys, Tata Steel, and Tech Mahindra.
- Broader market participation extended the momentum, with Midcap and Smallcap indices also climbing close to 4%.
- The suspension of high tariffs between the US and China further boosted global investor confidence.
Markets Explode Higher After Geopolitical Breakthroughs
In a stunning turn of events, benchmark stock indices Sensex and Nifty skyrocketed nearly 4% on Monday, May 12, 2025, recording their largest single-day point gains in history. This dramatic rally came as a wave of optimism swept global markets following a ceasefire agreement between India and Pakistan and a game-changing trade deal between the United States and China.
The 30-share BSE Sensex plunged 2,975.43 points, or 3.74%, to close at 82,429.90, a seven-month high. During intraday trading, the index briefly rallied as much as 3,041.5 points, peaking at 82,495.97. Meanwhile, the 50-issue Nifty soared by 916.70 points, or 3.82%, to settle at 24,924.70, hitting an intraday high of 24,944.80.
These historic gains outpaced even the sharp uptick seen on June 3, 2024, when the Sensex rose 2,507.45 points and the Nifty climbed 733.20 points.
What Sparked the Rally? A Perfect Storm of Good News
Investors were visibly encouraged by two major geopolitical breakthroughs over the weekend. First, India and Pakistan agreed to halt all military actions across land, air, and sea following the intense escalation sparked by the Pahalgam terror attack. India had launched ‘Operation Sindoor’ on May 7, targeting terror infrastructure in Pakistan and Pakistan-Occupied-Kashmir. But the weekend’s diplomatic breakthrough signaled a swift de-escalation.
Second, and equally pivotal, the United States and China announced a 90-day suspension of their ongoing tariff war after high-level talks in Geneva. The U.S. agreed to reduce tariffs on Chinese imports from 145% to 30%, while China reciprocated by cutting its tariffs on U.S. goods from 125% to 10%.
“Markets responded positively to the confluence of geopolitical and economic stability. The India-Pakistan ceasefire and the U.S.-China tariff rollback restored investor confidence in a big way,” said Vinod Nair, Head of Research at Geojit Financial Services.
A Surge Fueled by Broad-Based Buying
The rally wasn’t limited to a few large-cap stocks—it was widespread across sectors. From IT and metals to realty and banking, every major segment of the market joined the party.
Top Gainers:
- Infosys: +7.91%
- HCL Tech, Tech Mahindra, TCS: Strong gains across the tech spectrum
- Tata Steel: Continued to gain from trade flows being reopened by China.
- Axis Bank and ICICI Bank: Boosted by renewed credit growth optimism
- Reliance Industries: Up on energy optimism and global crude movement
Only Sun Pharma and IndusInd Bank closed in the red, showing how widespread the positive sentiment was.
“The return of risk-on sentiment was unmistakable. Retail and institutional investors piled back into equities, hoping this marks a turning point,” said Ajit Mishra, SVP, Research at Religare Broking Ltd.
Global Markets Rally in Unison
The bullish sentiment wasn’t limited to Indian bourses. The ripple effect was felt globally:
- Pakistan’s KSE-100 index soared more than 9% amid the ceasefire.
- In Asia, South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite, and Hong Kong’s Hang Seng all closed higher.
- European markets traded firmly in the green, reflecting the upbeat tone.
- U.S. markets had ended mixed on Friday but are expected to open stronger in the wake of the tariff suspension.
Commodity Watch
Brent crude mirrored the general optimism in risk markets, rising 2.88% to $65.75 a barrel. Meanwhile, gold—often seen as a safe haven—took a breather, reflecting a shift toward equities.
Investor Psychology: From Fear to Greed
The turnaround in market mood is a textbook example of how quickly sentiment can shift when uncertainty clears. The Sensex and Nifty had both fallen more than 1% on Friday, May 9, 2025, as tensions between India and Pakistan increased. The Nifty dropped 265.80 points to close at 24,008, while the Sensex dropped 880.34 points to 79,454.47.
Foreign Institutional Investors (FIIs) sold equities worth ₹3,798.71 crore that day, breaking their recent buying streak.
But by Monday, those fears had vanished. FII inflows resumed, and retail investors returned aggressively, encouraged by a clear path to peace and trade normalization.
“This was a perfect cocktail of good news—peace at the border and peace on trade. Both issues were weighing heavily on market psychology. With those clouds lifting, investors didn’t wait,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.
Broader Markets Mirror the Rally
Notably, Midcap and Smallcap indices also rallied close to 4%, indicating deep participation. This broad-based enthusiasm is often seen as a more sustainable signal of a bullish trend, as opposed to rallies driven by just a few heavyweights.
Market breadth remained firmly positive, with over 85% of NSE stocks ending in the green.
Outlook: Can the Rally Sustain?
The sustainability of this rally depends on multiple factors—progress in U.S.-China negotiations, political stability in South Asia, and inflation data due later this month. However, the sheer strength of the current move indicates renewed faith in equities.
“The next few sessions will be crucial. If buying interest remains and FIIs continue inflows, we could see Nifty testing new all-time highs,” added Nair from Geojit.
Conclusion
The markets have spoken, and the message is clear: peace pays. Monday’s record-breaking rally was not just a knee-jerk reaction—it was a collective sigh of relief from investors tired of volatility and geopolitical friction. While uncertainties remain, the events of May 12, 2025, will be remembered as a day when diplomacy and economic cooperation brought back the bulls with a roar.
