Monday blues turned into party hues on Dalal Street on May 12 as bulls took over after the conflict between India-Pakistan eased with the two neighbours coming to a mutual ceasefire. Rejoiced by the news, buying momentum took off on the bourses, pushing the benchmark Nifty 50 and Sensex around 2% higher at the opening bell today.
The bullish momentum gathered more pace as the day progressed, with the Sensex and Nifty surging 3% each.
With easing cross border conflict between India and Pakistan, the India VIX, a barometer for volatility in the market, also sharply dropped by 17% to levels close to 18, sigh of relief among investors.
The stellar upswing in the market was also widely anticipated as the GIFT Nifty futures had already soared 450 points over the previous close, pointing towards a strong bullish sentiment among investor, even before the opening bell.
Marching in step with the benchmarks, the broader markets responded positively to easing tensions, with both the Nifty Smallcap 100 and Nifty Midcap 100 soaring around 3% each.
At 10.50 am, the Nifty 50 was trading 2.8% higher at 24,687.50 points while the Sensex was up 2.7% at 81,620.36 points.
On May 10, India and Pakistan agreed to a ceasefire following escalating tensions triggered New Delhi’s ‘Operation Sindoor,’ which was a response to the April 22 terror attack in Pahalgam. Lieutenant General Rajeev Ghai, Director General of Military Operations, confirmed that DGMO-level talks between the two sides are scheduled for today noon to discuss the situation further.
Meanwhile, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer teased a trade deal with China over the weekend, stating that Washington and Beijing has reached an agreement. The negotiations saw "substantial progress,” according to the two officials, although any details of the deal remain under wraps and there was no mention of trimming tariffs on China.
Wall Street futures moved higher in response to the update, also lifting sentiment for Asian markets, most of which glimmered in the green today. The positive cues from these global market also aided the sentiment back home.
Also supporting the Indian market is the relentless buying from foreign institutional investors that have emerged as net buyers of Indian equities in the last 16 days.
“The hallmark of FPI investment in recent days has been the sustained buying by FIIs. FIIs bought equity through the exchanges consecutively for 16 trading days ending May 8, 2025 for a cumulative amount of Rs 48,533 crore. They sold on May 9, when the India-Pakistan conflict escalated. Now that a ceasefire has been declared, FIIs are likely to resume their equity purchases in India," believes VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
On the technical front, Shrikant Chouhan, Head of Equity Research, stated that the market has formed a long bearish candle on the weekly chart and is currently hovering near the crucial 200-day SMA support zone.
He cautioned that if the Nifty 50 stays below 24,200 levels, bearish sentiment may persist, potentially pulling the indices down to 23,800–23,600. However, a move above 24,200 could trigger a pullback rally for the Nifty towards 24,500, with a close above this level opening the door for a further rise to 25,000.
