Indian Stock Market Rallies Following Ceasefire, Trade Deal Hopes

MUMBAI, India — The Indian stock market opened sharply higher on May 12, 2025, boosted by a ceasefire between India and Pakistan and positive developments in US-China trade talks. The Nifty50 and BSE Sensex, two key equity benchmarks, surged over 2% during early trading.

The Nifty50 rose to 24,700.10, up 692 points, or 2.88%, while the BSE Sensex reached 81,692.50, rising by 2,238 points, or 2.82%. This surge comes after a week of losses due to escalating tensions between India and Pakistan.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, remarked, “The ceasefire between India and Pakistan has paved the way for a sharp rally in the market.” He noted that foreign institutional investors (FIIs) have been buying steadily for several weeks, with the exception of a brief pause during heightened conflict.

Market analysts are optimistic as domestic economic indicators suggest the potential for high GDP growth and a revival in earnings growth for the financial year 2026. The decrease in inflation and interest rates also supports a positive outlook for the market.

Investors are particularly focused on large-cap stocks, such as ICICI Bank, HDFC Bank, and Reliance Industries, which are expected to lead this market rally. Midcap IT and digital companies are also being closely watched, though pharmaceutical stocks may face challenges due to recent U.S. policy announcements.

In addition, market sentiment was bolstered by reports of progress in U.S.-China trade negotiations, although any definitive agreement is still pending. Asian equities and U.S. index futures have responded favorably to increased optimism regarding these talks, pushing the dollar higher.

As market dynamics shift, analysts suggest that investors should remain alert to updates from trade discussions, as any resulting agreements could further influence market momentum.