Indian equities soared on Monday, reversing last week’s losses, as easing border tensions with Pakistan, optimism around U.S.-China trade talks, and a supportive domestic macro environment spurred strong buying interest across sectors.
The BSE Sensex jumped 2,376 points, or 2.88%, to 81,830.65, while the Nifty50 surged 705 points, or 2.94%, to 24,713. The market capitalisation of all listed companies on the BSE rose by Rs 11.1 lakh crore to Rs 427.49 lakh crore.
Markets opened with a gap-up after India and Pakistan reached a ceasefire agreement over the weekend following four days of intense cross-border hostilities, offering temporary relief to investors rattled by the worst military escalation in decades. Risk appetite was further boosted by encouraging global cues, strong mutual fund inflows, and an upgrade to India’s sovereign credit outlook.
Below are the seven key drivers of Monday’s rally:
1. India-Pakistan ceasefire calms nerves
Investor sentiment turned sharply positive after India and Pakistan agreed to a temporary pause in hostilities on Saturday, following a week of retaliatory strikes and drone attacks. A fragile ceasefire held through Sunday despite hotline warnings from India about potential violations.
The Nifty had fallen nearly 1.5% over the three sessions through Friday amid fears of escalating conflict. Monday’s rebound reflected a return to risk-on positioning as markets priced in a possible cooling of geopolitical tensions.
2. Global risk sentiment lifts on U.S.-China trade progress
Asian equities gained up to 1% after the U.S. and China reported “substantial progress” during weekend trade talks in Geneva. U.S. futures and oil prices also rose, bolstering sentiment in Indian markets.
“Markets are set to soar as geopolitical tensions thaw,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.
“The trade deal announcement between the U.S. and the UK, along with reports that U.S. and Chinese officials met in Switzerland over the weekend, paved the way for broader negotiations and tariff de-escalation—supporting investor sentiment,” he added.
3. Mutual fund SIP inflows hit record high
Domestic institutional support remained strong, with monthly SIP inflows hitting a record Rs 26,632 crore in April—up 2.72% from the previous month. Assets under management via SIPs reached Rs 13.9 lakh crore, while FY25 SIP flows surged 45.24%, the fastest growth since FY18.
“India’s markets and economy have shown remarkable resilience, consistently withstanding external shocks,” Vakil said.
“This strength stems from a steady, domestically driven economy that helps shield us from global turbulence—reinforcing the idea that every crisis eventually passes.”
4. India’s sovereign credit rating gets a boost
Morningstar DBRS upgraded India’s sovereign credit rating to BBB (Stable) from BBB (Low), citing improved macro fundamentals. Both long-term foreign and local currency issuer ratings were raised.
The upgrade signals confidence in India’s economic trajectory and enhances its investment appeal amid global volatility.
Vakil noted the rating revision “will buoy bulls” and supports the broader narrative of India’s macroeconomic resilience.
5. Strong sectoral participation signals broad-based buying
All major sectoral indices—excluding pharma and healthcare—opened in the green, reflecting widespread investor participation. Nifty Realty led gains with a 4.5% surge, followed by Nifty PSU Bank (3%), Nifty Auto (2.5%), and Nifty IT (3.7%).
The broader market also rallied, with the Nifty Midcap 100 and Nifty Smallcap 100 indices gaining 3.3% and 3.5%, respectively.
Among individual stocks, Adani Ports, Axis Bank, L&T, Bajaj Finance, and NTPC rose between 3–4%. Reliance Power soared over 10% after reporting a consolidated Q4 net profit of Rs 126 crore versus a loss a year ago. Adani Power jumped 7% after winning a Rs 2 billion power supply project in Uttar Pradesh.
6. Technical bounce from key support levels
Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the Nifty had formed a long bearish candle on the weekly chart and was hovering near the 200-day SMA.
“We believe that as long as the market stays below 24,200/80,000, weak sentiment may persist. But a breakout above 24,200/80,000 could trigger a pullback rally. A close above 24,500/81,000 may push the indices toward 25,000/82,500,” he noted.
Both benchmarks broke through key resistance levels in early trade, with traders now watching for sustained momentum.
7. Oil prices rise on trade hopes
Crude prices edged higher on optimism around U.S.-China trade discussions, which suggested improving demand from the world’s two largest oil consumers. Brent crude rose 27 cents (0.4%) to $64.18 a barrel, while WTI gained 28 cents (0.5%) to $61.30.
The rise in oil prices supported energy stocks and reinforced a broader improvement in global economic sentiment, indirectly lifting Indian market confidence.
Outlook: Will the rally sustain?
While Monday’s rally signals improved sentiment, analysts remain cautious about the durability of the India-Pakistan ceasefire and evolving global developments.