And When the Bullets Stopped, Bulls Ran Free
India's equity benchmarks jumped nearly 4% on Monday, posting their biggest single-day gain in four years, buoyed by stoppage of hostilities with Pakistan and a truce in the US-China tariff war. The thaw in frosty relations between the world's largest economies revived risk-on sentiment, sending safe-haven assets such as gold tumbling.
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The
BSE Sensex
jumped 2,975 points, or 3.7%, to close at 82,429.9. The NSE Nifty surged 916.7 points, or 3.8%, ending over 24,924. Both indices closed at their highest levels for the year, aided by the sharpest run-up in a day since February 2021.
The rally boosted the market capitalisation of BSE-listed companies by ₹16.9 lakh crore.
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Easing of hostilities on both fronts came as a significant reprieve for investors who have been on edge due to uncertainties over the outcome of geopolitical and economic conflicts in the past few weeks. While all Asian markets rallied after the US and China agreed to a 90-day pause on tariffs and slashed levies, Indian bourses got an extra fillip from the halt in fighting with Pakistan, forcing traders to liquidate bearish bets made late last week amid heightened tensions between the neighbours.
Pakistan's main share index soared 9% on Monday. 'Today's (Monday's) market rally is a confluence of positive global and domestic developments — from easing geopolitical tensions between India and Pakistan, to progress on US-China trade talks,' said Taher Badshah, chief investment officer at Invesco Mutual Fund.
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The Volatility Index (VIX), the market's fear measure, plunged 15% to 18.4, in line with the equities rebound, indicating options traders see lower risks in the near term. Last week, this index had surged over 16% as the Sensex and Nifty declined 1.3% on fears of a full-blown conflict with the neighbouring nation.
The broader market also ended strong, with the Nifty Midcap 150 jumping 3.75% and the Nifty Small-Cap 250 gaining 4%. Of the 4,254 stocks traded on the BSE, 3,545 advanced, while 576 declined.
The bullish momentum may push the markets higher in the days ahead, but fund managers do not rule out intermittent sell-offs. 'The market could see small doses of correction over the next few days after this massive rally,' said Badshah. 'But what has changed now is that it's now more of a buy-on-dips market, rather than a sell-on-rise market.'
The Sensex and Nifty are up nearly 13% since April 7, when the recent rebound started after Trump halted tariffs on imports from most countries, barring China, for 90 days.
Gold, one of the best performers in recent times because of its safe-haven status, slumped nearly 3% on Monday in response to the pause in the US-China tariff conflict. 'For investors, our view is that a clear framework of disciplined asset allocation matters more than reacting to noise,' said Neelesh Surana, chief investment officer at Mirae Asset Investment Managers.
All sectoral indices in India ended in the green, with metals, realty, power, IT, and energy stocks leading the charge, rising between 4% and 6%.
Foreign portfolio investors (FPIs) remained net buyers, purchasing shares worth Rs 1,246.5 crore on Monday. Domestic institutional investors (DIIs) also contributed to the rally, investing Rs 1,448.4 crore during the day.
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