Markets Rally As India-Pakistan Ceasefire, US-China Trade Deal Optimism Lift Investor Sentiment

Domestic stock markets surged more than 2 per cent on Monday (12 May), upbeat by ceasefire understanding between India and Pakistan and encouraging developments in US-China trade talks.

The BSE Sensex jumped 1,896.28 points, or 2.39 per cent, reaching 81,350.75 in early trading, while the NSE Nifty 50 gained 605.2 points, or 2.52 per cent, to touch 24,613.2, Indian Express reported.

The rally comes in the wake of a declared ceasefire between India and Pakistan that brought an immediate wave of optimism among traders.

“A thawing of the relationship between India and Pakistan is likely to trigger a massive rebound for benchmark Nifty early Monday trades, but that said any fresh violations of the ceasefire deal from Pakistan could keep bullish sentiments fragile,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Boosting the positive momentum was progress in trade talks between the United States and China, confirmed by the White House on Sunday.

Following two days of discussions in Geneva, both countries reached an agreement that could help reduce tensions and pave the way for further negotiations.

“The trade deal announcement between US and UK and reports that U.S. and Chinese officials meeting in Switzerland on the weekend for trade discussions, paved the way for broader negotiations and tariff de-escalation, supported investor sentiment,” said Devarsh Vakil, Head of Prime Research, HDFC Securities.

However, concerns linger on the pharmaceutical front. A new directive from US President Donald Trump aimed at cutting medication costs could reduce revenue for US drug firms and their Indian suppliers. Indian pharma stocks may face pressure as a result.

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