On Monday, May 12, 2025, the Indian stock market experienced a remarkable rally, with the BSE Sensex surging nearly 2,975 points to close at 82,429, and the Nifty 50 climbing 916 points to settle at 24,924.  This significant upswing was fueled by positive developments both domestically and internationally, including the announcement of an India-Pakistan ceasefire and a breakthrough in U.S.-China trade negotiations.

Key Drivers of the Market Rally

1. India-Pakistan Ceasefire:

Tensions between India and Pakistan eased following the announcement of a ceasefire agreement. This development led to a sharp decline in market volatility, with the India VIX dropping over 20% to its lowest level since April.  The de-escalation of geopolitical tensions boosted investor confidence, contributing to the market’s upward momentum.

2. U.S.-China Trade Agreement:

The United States and China reached a deal to slash reciprocal tariffs, marking a substantial de-escalation of their trade war. This agreement included a 90-day pause on trade measures and a significant reduction in tariffs, aiming to stabilize the global economy and financial markets.  The news positively impacted global markets, with Chinese stocks rallying and the yuan strengthening.

3. Sectoral Gains:

All sectoral indices on the NSE closed in the green, with notable performances in the IT, metal, realty, and financial services sectors. The Nifty IT index soared 6.5%, marking its sharpest intra-day rally since April 2020, driven by the positive sentiment from the U.S.-China trade deal.  Metal stocks also surged over 8% as the easing of tariffs boosted global metal prices. 

Corporate Earnings Highlights

Tata Steel:

Ahead of its Q4 results, Tata Steel shares gained 2.94% to ₹146.95. The company is expected to report an 85% surge in net profit for the quarter, with particular attention on its European operations. 

UPL:

UPL reported a consolidated net profit of ₹896 crore for Q4, below the estimated ₹1,080 crore. However, its revenue from operations stood at ₹15,572 crore, surpassing expectations. 

PVR Inox:

The multiplex chain narrowed its Q4 loss to ₹125 crore from ₹129.5 crore in the same period last year, with revenue slightly decreasing to ₹1,249.8 crore. 

Ather Energy:

The electric vehicle manufacturer reported a Q4 loss of ₹234.4 crore, an improvement from the ₹283.3 crore loss in the previous year, with revenue increasing by 29% to ₹676.1 crore. 

Broader Market Impact

The market rally led to a significant increase in investor wealth, with the total market capitalization of BSE-listed companies rising by ₹15 trillion.  Midcap and smallcap indices also experienced substantial gains, with the Nifty Midcap 100 and Smallcap 100 indices up over 4%.

Global Market Reactions

The positive developments in U.S.-China trade relations had a ripple effect across global markets. Chinese stocks rallied, with the Hang Seng Index gaining over 3%, and the yuan strengthened to a six-month high against the dollar.  Additionally, Brent crude oil prices rose over 3% to $64.14 per barrel, while gold prices slipped 3% as investors shifted towards riskier assets. 

Conclusion

May 12, 2025, marked a significant day for the Indian stock market, with the Sensex and Nifty achieving record highs. The combination of easing geopolitical tensions and positive global trade developments created a favorable environment for investors, leading to widespread gains across sectors. As the market continues to respond to these developments, investors will be closely monitoring upcoming corporate earnings and global economic indicators.