Indian stock markets rallied sharply in early trade on Monday, reflecting a boost in investor sentiment following the easing of tensions between India and Pakistan. Both countries reached an understanding on Saturday to halt hostilities, providing a much-needed fillip to market confidence.
The benchmark Nifty 50 index surged 412.10 points, or 1.72 per cent, to open at 24,420.10, while the BSE Sensex climbed nearly 1,300 points, or 1.64 per cent, to begin the session at 80,754.37. Analysts noted that despite the recent turbulence, Indian markets displayed remarkable resilience, buoyed by strong inflows and a return to risk-on sentiment.
"Indian futures are pointing to a sharp 2 per cent up-move, as all the losses due to the India-Pak kinetic conflict are made up on the back of the cessation of active hostilities in the region. Indian markets weathered the turbulence quite well and are set to recover smartly today," banking and market expert, Ajay Bagga said.
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Bagga further noted, "Overall, tourism in North India is the biggest impacted sector, with mass cancellations in the peak summer holiday season affecting important tourist hubs. Defence stocks should see buying interest with fresh orders expected. Sentiment remains fragile geopolitically, but the resilience of the Indian markets points to a potential strong rally in the near future, with both FPIs and DIIs staying buyers."
Sectoral indices reflected widespread buying interest. The Nifty PSU Bank index jumped over 3 per cent, signalling strong demand for public sector lenders. Nifty Auto rose 2.25 per cent, while Nifty IT gained 2.16 per cent. Nifty Realty led the gains, surging over 4 per cent in early trade, reflecting optimism in the real estate sector.
On the global front, positive cues further buoyed market sentiment. The US and China described their trade talks in Geneva over the weekend as "productive and positive," adding to the market optimism. Asian markets also opened higher, supported by hopes of a potential US-China trade agreement.
Meanwhile, commodity markets saw mixed reactions. Gold prices dropped by over 2 per cent, reflecting the return of risk appetite, while oil prices and the US dollar moved higher. US futures indicated an expected gain of over 1 per cent for Wall Street later in the day.
However, the outlook for the pharmaceutical sector remained uncertain. US President Donald Trump is expected to sign an executive order aimed at reducing prescription drug prices, which could weigh on Indian pharma shares.
Trump is also set to begin his Middle East tour on Tuesday, where he is expected to announce significant deals related to energy, nuclear cooperation, defence procurement, and other strategic sectors.
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