Indian stock markets staged a strong rebound on May 12, lifted by a ceasefire between India and Pakistan and reduced trade tensions between the US and China. Both benchmark indices posted their biggest intraday jumps in four years, with the Nifty 50 climbing 3.8% and all sectoral indices ending in the green.
Markets made a dramatic comeback on Monday, May 12, recovering from one of their worst intraday performances in over a month last Friday. The announcement of a ceasefire between India and Pakistan on Saturday sparked renewed optimism among investors, who had been wary due to the escalating conflict between the neighboring countries.
Adding to the upbeat sentiment, the US and China, reached a deal on Monday to suspend most tariffs on each other’s goods. The move gave a major boost to domestic tech stocks, which had been under pressure.
These developments handed full control of Dalal Street to the bulls, propelling both benchmark indices to their highest intraday gains in four years and lifting them to a seven-month peak. The rally also pushed the market capitalization of BSE-listed companies above ₹5 trillion once again.
The Nifty 50 closed with a 916.70-point gain, up 3.8%, ending the session at 24,924. Meanwhile, the Sensex surged 2,975 points, or 3.74%, to finish at 82,429. The broader markets outperformed, with the Nifty Midcap 100 rising 4.12% and the Nifty Smallcap 100 jumping 4.27%.
On Saturday, India and Pakistan agreed to halt all military actions across land, air, and sea from 5 PM onwards. Analysts highlighted the Indian market’s resilience despite the tense geopolitical backdrop.
With border tensions easing, investors returned to equities, triggering a strong rally supported by robust inflows. The conflict had intensified after a terrorist attack in Pahalgam, Indian-administered Kashmir, on April 22 that killed 26 civilians, most of them tourists.
India responded with “Operation Sindoor,” targeting militant camps in Pakistan and Pakistan-administered Kashmir. Pakistan retaliated with drone and missile attacks, which the Indian Army completely neutralized.
Meanwhile, according to a joint statement from Geneva, the US and China struck a trade agreement featuring a 90-day tariff pause and a sharp reduction in reciprocal tariffs by 115 percentage points. This marked a major step toward easing trade tensions that had been growing since Donald Trump’s reciprocal tariff announcement on April 2.
Under the agreement, reciprocal tariffs will fall from 125% to 10%. However, the U.S. will retain a 20% tariff on Chinese imports linked to fentanyl, leaving total tariffs at 30% on Chinese goods. China, in turn, has cut tariffs on US imports to 10%.
Broad-based buying lifts all sectors; IT leads with 7% surge
All 13 sectoral indices ended in positive territory. Nifty IT emerged as the top gainer, jumping 6.70% in its biggest intraday gain in five years. The easing of global tensions raised hopes that the US economic slowdown might not be as severe as feared.
Other strong performers included Nifty Realty, Nifty Metal, and Nifty Auto, which posted gains ranging from 3.40% to 6%.
Vinod Nair, Head of Research at Geojit Financial Services, said, “A mix of positive geopolitical and economic news—the India-Pakistan ceasefire and the breakthrough US-China trade deal—sparked the most powerful daily rally in recent times. The tariff issue had been the key factor in this year’s market consolidation. The abrupt resolution unlocked multiple investment opportunities.”
“Sustained inflows from foreign institutional investors (FIIs), coupled with renewed retail interest on hopes of a business sentiment revival, powered today’s rally. However, the market could see some consolidation soon as investors look for concrete earnings growth. In the meantime, mid- and small-cap stocks are likely to carry forward the positive momentum,” he added.
Nifty 50 short-term outlook: Experts see 25,750 target
Rupak De, Senior Technical Analyst at LKP Securities, said, “The Nifty had its best day in four years, driven by a series of positive triggers that encouraged risk-on sentiment. Technically, the index has broken out of a consolidation zone across several timeframes, confirming a bullish trend. It continues to hold above a key moving average. Any dips are likely to be bought into, provided the index stays above 24,350. This leg of the rally could stretch to 25,350–25,750 in the short term.”
