Capital market stocks strongly gained on May 12 after risk-on sentiment returned to equities, as India-Pakistan tensions cooled off over the weekend after a sharp escalation.
The rise in share prices pushed the Nifty Capital Markets index higher by 5 percent, snapping a two-day losing streak.
Easing geopolitical tensions in the region also helped cool down volatility in the markets, which in turn may have further boosted the capital market shares. The India VIX, which measures volatility in the capital markets, fell around 17 percent to mark its biggest single-day fall since April.
Nippon Life India Asset Management was the top gainer on the Nifty Capital Markets index, rising over 10 percent to trade at Rs 687 per share. 360 One WAM and Multi Commodity Exchange Of India (MCX) shares followed, soaring nearly 8 percent each. Motilal Oswal Financial Services, CAMS and Angel One shares meanwhile rose over 5 percent each.
Bombay Stock Exchange (BSE) shares jumped nearly 5 percent to trade at Rs 6,882 apiece. Earlier today, the stock hit an all-time high of Rs 7,047 apiece. The rally in the stock's price was fueled by expectations of a major relief on index options limit by SEBI. Moneycontrol has reported that the market regulator is likely to come up with a much higher index options position limit as compared to what was proposed earlier.
HDFC AMC and UTI AMC shares jumped over 4 percent, while those of Kfin Technologies, CDSL and IEX were up over 3 percent each. Nuvama and Anand Rathi shares were meanwhile trading over 2 percent each.
India and Pakistan on May 10 announced an understanding to stop all firings and military actions on land, air and sea. This followed increased hostilities after 'Operation Sindoor' on early May 7 destroyed nine terror sites in Pakistan and Pakistan-Occupied-Kashmir in retaliation to the Pahalgam terror attack.
Also read: India-Pak ceasefire among key factors behind massive market rally
"The de-escalation between India and Pakistan removes a key overhang on investor sentiment and is likely to be seen as a major positive development by financial markets. Historically, markets have responded positively to such geopolitical cooling," said Prashanth Tapse, Senior VP (Research), Mehta Equities.
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