On a momentous Monday, Indian stock markets experienced an extraordinary surge, with benchmark indices soaring nearly 4%, marking the most significant single-day increase in over four years. This rally not only set records for point gains but also resulted in an impressive addition of ₹16.20 lakh crore in investor wealth. The day’s trading session was nothing short of historic, showcasing the resilience and potential of the Indian market.

Ceasefire Sparks Market Optimism

The remarkable gain was primarily fueled by the announcement of a ceasefire between India and Pakistan, which took place over the weekend. Following this news, the KSE-30 Index in Pakistan also experienced a substantial rise of 9.1%, its highest leap since 2008, leading to a temporary trading halt due to the surge.

Investor confidence received an additional boost from a temporary trade agreement between the U.S. and China, with American stock indices, including the Dow Jones, Nasdaq, and S&P 500, all opening with gains ranging from 1.5% to 4.16%.

Remarkable Gains in Indian Indices

The Sensex jumped by 3.74%, or 2,975.43 points, closing at 82,429.90—the highest percentage rise since February 1, 2021. Meanwhile, the Nifty index witnessed a robust increase of 3.82%, or 916.70 points, finishing the day at 24,924.70. The broader market indices, including BSE Midcap and BSE Smallcap, also enjoyed significant boosts, rising by 3.85% and 4.18%, respectively.

Insights from Market Experts

Market analysts weighed in on the day’s events. Nilesh Shah, Managing Director of Kotak Mahindra AMC, attributed the sharp increase to a mix of FOMO (fear of missing out) and short covering among investors. He noted that the market’s euphoria was partly due to the successful execution of "Operation Sindoor," a military action against Pakistan.

Shankar Sharma, founder of GQuant Investech, highlighted that the resolution of larger geopolitical issues often leads to market rallies. He pointed out that the anticipated U.S.-China trade deal further fueled the positive sentiment, suggesting that investors might bask in this optimism for some time.

Future Market Trends

Saurabh Mukherjea, founder of Marcellus Investment Managers, indicated that the relief rally stemmed from the ceasefire news. He cautioned that while small- and mid-cap stocks appear overvalued, high-quality large-cap stocks remain a safer investment.

Sumit Poddar of Tikona Capital believes that future market direction will depend on earnings reports and consumer sentiment. Meanwhile, Shah predicts a return to fundamental drivers of growth, as the initial excitement settles.

Positive Market Breadth and Sector Performance

Both foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) were net buyers on this remarkable day. Provisional data from the BSE showed that FPIs acquired shares worth ₹1,246.48 crore, while DIIs purchased ₹1,448.37 crore worth of stocks.

The overall market sentiment was overwhelmingly positive, with a ratio of six gainers for every loser on the BSE (3,541 advances versus 582 declines). The NSE India VIX index also fell by 15%, signaling reduced market volatility, with all sectoral indices on both the BSE and NSE closing in the green. Notably, the IT, real estate, metals, TECK, and utility sectors excelled, each gaining over 5%.

Individual Stock Highlights

Among the Sensex constituents, Infosys led the charge with an impressive 7.91% gain, supported by HCL Tech, Tata Steel, Eternal, and Tech Mahindra, which all rose more than 5%.

HDFC Bank was a significant contributor to the Sensex’s rise, adding 446 points to the index. Other notable contributors included ICICI Bank (374 points), Infosys (367 points), Reliance Industries (343 points), and TCS (155 points).

Reliance Industries emerged as a major wealth creator, with its market cap increasing by ₹79,571 crore to reach ₹19.44 lakh crore, following a 4.27% increase in share price. Other large-cap stocks like TCS, HDFC Bank, Infosys, and ICICI Bank also witnessed substantial gains in their market capitalizations.

Conclusion

In summary, Monday’s trading session marked a significant milestone for the Indian stock market, driven by geopolitical developments and global economic news. With both domestic and foreign investors showing confidence, the market appears poised for further growth, contingent on fundamental performance and market conditions. The landscape looks promising as investors navigate through this dynamic environment.