Bull run on D-St! Nifty tops 24,700, Sensex soars 2,300 points on India-Pakistan ceasefire

FIIs bought equity worth Rs 48,533 crore for 16 trading days until May 8, 2025.

Benchmark indices Nifty 50 and Sensex zoomed two percent during the opening bell on Monday, May 12, as investors cheered the thawing cross-border tensions between India and Pakistan. Over the past week, the markets had been stuck in a narrow range, and the ceasefire announcement  between the countries led to a significant breakout on the upside.

At 09:29 am, the Sensex was up 1,884.69 points or 2.37 percent at 81,339.16, and the Nifty was up 575.00 points or 2.40 percent at 24,583.00. About 2713 shares advanced, indicating the market breadth was firmly in the favour of bulls, while 264 shares declined, and 103 shares remained unchanged.

All indices barring the Nifty Pharma index soared in trade, as the ceasefire announcement lifted sentiment. The Nifty Pharma fell to selling pressure, as U.S. President Donald Trump announced that the United States would sharply cut its prices on pharmaceuticals, making them among the lowest globally. The domestic pharma sector exports generic versions of drugs to the U.S., and such a move would have a significant impact on the topline.

The broader markets also celebrated cooling tensions, with the Nifty Smallcap 100 and the Nifty Midcap 100 jumping three percent each.

Adani Enterprises, Jio Financial Services, Adani Ports and SEZ, Shriram Finance and Trent were the top gainers on the Nifty 50 index. The sole laggards were Sun Pharma and Cipla.

As India-Pakistan tensions ease, with an official ceasefire announced, the markets will now turn their focus towards trade-related triggers that will guide sentiment. "Morningstar DBRS's upgrade of India's sovereign rating to BBB (stable) from BBB (low) will also buoy bulls," noted Devarsh Vakil, Head of Prime Research at HDFC Securities.

Global cues favourable

U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said they had reached an agreement with China to reduce the U.S. trade deficit on Sunday, May 11. The negotiations saw "substantial progress," although any details of the deal remain under wraps and there was no mention of trimming tariffs on China.

Wall Street stock futures moved higher, with U.S. Treasury Secretary Scott Bessent's positive comments on a U.S.-China trade deal signaling a potential easing of trade tensions triggered by former President Trump’s tariff measures. Dow futures climbed 1.03 percent, S&P 500 futures advanced 1.31 percent, and Nasdaq futures gained 1.71 percent.

Global markets also responded positively. Asian stocks rallied, and the dollar gained strength as investor sentiment improved on hopes of a breakthrough in U.S.-China trade relations. Australia, Japan, and South Korea saw early gains, with Japan’s Topix index rising for a 12th straight session, the longest streak since October 2017.

Institutional flows

On May 9, after being net buyers for 16 consecutive sessions, Foreign Institutional Investors (FIIs) turned net sellers. During the trading session, they sold domestic equities worth Rs 3,799 crore, while Domestic Institutional Investors (DIIs) sold their holdings worth Rs 7,278 crore.

"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 crores. 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," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Technical levels 

The sharp rally from the April lows of 21,700 has now lost momentum, with the index slipping towards the key moving averages. Despite this, the market has shown some resilience, as the correction has been relatively contained given the magnitude of the geopolitical risks.

The May 9 session was characterized by choppy moves and abrupt intraday selling, where every minor rise was promptly met with supply, triggering false breakouts and routine profit-taking. This erratic pattern of action led to multiple intraday whipsaws, a hallmark of a market lacking clear conviction.

"The previous breakout level around 23,800 now becomes a key support. A breach of this level could trigger further downside, with the next major support zone seen between 23,600 and 23,500. On the upside, immediate resistance lies between 24,250 and 24,300," said Rajesh Bhosale, Equity Technical Analyst, Angel One.

Options outlook

The options data paints a cautious-to-bearish picture. Call writers have significantly ramped up their positions at higher strike prices, creating stiff overhead resistance. On the other hand, put writers are seen exiting higher levels and shifting their positions downward, an indication of the bulls’ retreat.

"The 24,500 Call strike has accumulated heavy open interest of 51.04 lakh contracts, firmly marking it as a key ceiling. Meanwhile, the 24,000 Put strike has seen substantial writing with 72.81 lakh contracts, confirming it as a critical immediate support. The concentration of open interest in the 24,400–24,500 band underscores this resistance zone," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities said.

The Put-Call Ratio (PCR) has slipped from 0.85 to 0.73, highlighting growing caution among participants. Max Pain remains centered at 24,050, suggesting the market is still awaiting a decisive move in either direction.

Strategy for traders

"Investors are advised to adopt a stock-specific approach and refrain from taking aggressive positions until there is more clarity. A hedged strategy is recommended to manage near-term risks, while close monitoring of geopolitical developments will be crucial in shaping the market's next move," said Ajit Mishra – SVP, Research, Religare Broking.

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