Indian equity markets surge as ceasefire eases geopolitical tensions

Sensex and Nifty rose sharply, reversing a 3-day losing streak. 48 of Nifty 50 stocks in the green, and 12 of 13 sectors posted gains.
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CHENNAI: Indian stock markets rallied sharply on Monday as investors responded positively to a ceasefire agreement between India and Pakistan, signaling a temporary de-escalation of the most serious hostilities in nearly three decades. The benchmark BSE Sensex and NSE Nifty 50 surged, with both indices posting strong gains, reversing the recent downtrend fueled by geopolitical concerns.

The Nifty 50 saw 48 of its constituents in the green, reflecting widespread buying interest. Additionally, 12 of the 13 major sectoral indices on the NSE posted gains, led by banking, IT, and metals. Broader markets also participated in the rally, with mid-cap and small-cap indices jumping approximately 3% each, signaling robust risk appetite across investor segments.

This rebound comes after the Nifty declined nearly 1.5% over the previous three sessions due to heightened geopolitical risks stemming from intensified conflict between India and Pakistan.

Geopolitical Developments:
Tensions between the two nuclear-armed neighbors escalated last week following India's targeted strikes on nine sites in Pakistan, which were described as “terrorist infrastructure.” These strikes came in retaliation for a deadly attack in Kashmir two weeks earlier that left 26 people dead. The ceasefire agreement reached over the weekend has provided markets with a much-needed breather and boosted investor sentiment.

Global Market Context:
Global equity markets also showed signs of optimism amid improving geopolitical and economic conditions:

  • S&P 500 futures gained 1.4%, indicating strong risk-on sentiment in the US markets.

  • Japan’s Topix rose 0.3%, while Australia’s S&P/ASX 200 climbed 0.5%.

  • Euro Stoxx 50 futures advanced 0.8%.

  • The US dollar strengthened as investors responded to reports of “substantial progress” in US-China trade negotiations.

  • This positive global backdrop, combined with easing regional tensions, supported gains in Indian equities and contributed to the broad-based market rally.

Investor Outlook:
With geopolitical risks temporarily easing and global cues turning favorable, Indian markets are poised to maintain upward momentum in the near term. However, investors will remain cautious as they monitor further developments on the India-Pakistan border and progress in US-China trade discussions.

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