India's total market capitalisation of all listed companies on the Bombay Stock Exchange surged by more than ₹16 lakh crore, marking its sharpest single-day rise ever, reaching Rs432.56 lakh crore on May 12.
This equity market rally followed the announcement of a ceasefire between India and Pakistan, which significantly boosted investor sentiment.
Benchmark indices Sensex and Nifty 50 each rose by over 3.7 percent, their biggest single-day gains since February 2021. Broader market indices too joined in with the BSE Midcap index advancing 3.85 percent and the SmallCap index rising 4.2 percent.
Foreign institutional investors have been key drivers of the momentum, emerging as net buyers for 16 consecutive sessions, investing over $6.13 billion during this period.
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The market breadth was decisively positive on May 12, with 3,541 stocks advancing, 582 declining, and 131 remaining unchanged, in afternoon trade. Additionally, 435 stocks hit their upper circuit limits, while 168 reached lower circuits.
Analysts attribute the rally to multiple supportive cues aside of the end of hostilities between India and Pakistan. Signs of de-escalation in the Russia-Ukraine conflict - with negotiations planned in Istanbul - have helped ease global uncertainty and improve investor risk appetite. Progress in tariff negotiations between China and the United States in Geneva, and a joint statement have further lifted hopes of easing trade tensions, particularly benefiting export and manufacturing sectors.
This confluence of factors has led to a risk-on sentiment globally, with volatility subsiding and international cues turning favourable. Markets are expected to maintain their upward trajectory, said experts, assuming domestic macroeconomic conditions remain stable.
Manish Goel, Founder and Managing Director of Equentis Wealth Advisory Services said India's macroeconomic fundamentals remain robust. “Recent inflation and PMI data reaffirm the strength of the economy. While geopolitical events like the recent India-Pakistan flare-up or Trump’s tariff rhetoric have caused short-term volatility, such events rarely derail India’s long-term growth story,” Goel said.
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Equentis also advised investors to view market corrections as opportunities rather than setbacks. “Markets tend to correct annually but historically recover swiftly. Investors who remain disciplined and use dips to accumulate quality businesses often benefit the most. Keeping around 10 percent of a portfolio in cash or low-volatility assets enables decisive action during sharp corrections of 10 percent or more. It’s not about timing the market, but about being prepared to act when it matters most.”
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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