By Ananya Grover, Nesil Stanley & Kishor Kadam
It was a historic day for Indian stock markets, as benchmark indices surged nearly 4%, marking the biggest single-day gain in over four years. In addition, multiple records were set during the trading session on Monday, including the highest-ever single-day gain in terms of points and an all-time high investor wealth addition of Rs 16.20 lakh crore.
The rally was triggered by the ceasefire between India and Pakistan announced on Saturday. Even Pakistan’s stock benchmark KSE-30 Index surged as much as 9.1%, the most since 2008, in a rally that triggered an hour-long trading halt.
Investor sentiment was further bolstered by the announcement of a temporary trade deal between the US and China. US markets traded in the green, with all three indices — Dow Jones Industrial Average, Nasdaq Composite and S&P 500 — opening up between 1.5% and 4.16%.
The Sensex soared by 3.74%, or 2,975.43 points – the highest in percentage terms since February 1, 2021 — to close at 82,429.90, while the Nifty jumped 916.70 points, or 3.82%, to end the day at 24,924.70. The broader market indices also joined the rally, with the BSE Midcap and the BSE Smallcap indices rising 3.85% and 4.18%, respectively.
Nilesh Shah, MD, Kotak Mahindra AMC said that Monday’s gap-up opening and sustained rise were due to “a combination of FOMO (fear of missing out) and short covering among speculators and investors” in response to the successful execution of the “Operation Sindoor” military action against Pakistan.
Shankar Sharma, founder GQuant Investech, said, “Once the larger problem than current ones goes away, there is a sense of elation. That is exactly why markets rallied today. And of course, an impending US-China trade deal helped.” He believes that going forward, markets are going to bask in this feel-good situation for a while.
Saurabh Mukherjea, founder of Marcellus Investment Managers, said the markets saw a relief rally on Monday, after the weekend ceasefire between India and Pakistan. At the same time, global markets rallied due to the US-China trade deal. According to him, while small- and mid-caps remain significantly overvalued, there is no valuation concern in high-quality large-cap names.
Sumit Poddar, founder, Tikona Capital, believes that markets would now focus on earnings and consumer/business sentiments at the ground level to take further direction.
Shah of Kotak Mahindra AMC believes that the fizz will settle soon and markets will be driven by fundamentals of earnings growth in the coming days.
Both foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) were net buyers on Monday. According to provisional data from the BSE, FPIs made net purchases worth Rs 1,246.48 crore, while DIIs bought shares worth Rs 1,448.37 crore.
Overall, the market breadth was overwhelmingly positive, with six gainers for every loser on the BSE (3,541 advances vs 582 declines).
The NSE India VIX index slumped 15% to 18.39, indicating a sharp decline in market volatility. All sectoral indices on both the BSE and the NSE were in the green. IT, realty, metal, TECK, services, and utilities sectors were the top performers, each gaining over 5%.
The pharma sector, however, posted only marginal gains, as shares of pharmaceutical companies declined across Europe and Asia following US President Donald Trump’s announcement of a plan to cut US prescription drug costs by up to 80% to align them with global pricing.
With nearly 4% gains, Indian equity indices were the best performers among major Asian markets. Hong Kong rose 2.98%, South Korea gained 1.17%, and Taiwan advanced 1.03%. China and Japan posted smaller gains of 0.82% and 0.38%, respectively, while markets in Singapore, Malaysia, Indonesia, the Philippines, and Thailand were closed.
Among the Sensex constituents, IT major Infosys led the pack with a 7.91% gain, followed by HCL Tech, Tata Steel, Eternal, and Tech Mahindra, each rising over 5%.
HDFC Bank was the top contributor to the Sensex rally, adding 446 points to the 2,975-point gain. Other major contributors included ICICI Bank (374 points), Infosys (367 points), Reliance Industries (343 points), and TCS (155 points).
Reliance Industries emerged as the top wealth creator, with its market capitalisation rising by Rs 79,571 crore to Rs 19.44 lakh crore, as its share price gained 4.27%. TCS, HDFC Bank, Infosys, and ICICI Bank were also major beneficiaries, each adding anything between Rs 44,000 crore and Rs 64,000 crore in market capitalisation.