Stock Market Sees Strong Bulls After Indo-PAK Ceasefire; 7 Reasons Why Sensex, Nifty Jumped 3% On May 12?

Stock Market Update: The Indian stock market witnessed one of the strongest single-day rallies of the month of May on Monday after India and Pakistan announced a ceasefire agreement during the weekend. Both Sensex and Nifty neared pivotal levels of 81,900 and 24,750, respectively.

Despite US President Donald Trump's new tariff threats on pharma stocks, all sectoral indices recorded a bullish trend in the early trade. The market is also positioning itself to brace for key economic data scheduled later this week.

"The ceasefire between India and Pakistan has paved the way for a sharp rally in the market. The prime mover of the rally will be the FII buying, which has been sustained for sixteen continuous days except last Friday, when the conflict escalated. Domestic macros like expectations of high GDP growth and revival of earnings growth in FY26 and declining inflation and interest rates augur well for the resumption of a rally in the market," Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Sensex, Nifty:

Sensex skyrocketed by 2,376.18 points, or 2.99%, to hit an intraday high of 81,830.65. At the time of writing, Sensex was up by 2.7% to trade above 81,614.59.

Meanwhile, Nifty 50 climbed sharply by 729.8 points, or 3% to hit an intraday high of 24,737.80. The benchmark traded at 24,687.55, higher by 2.8%, at the time of writing.

All indices traded on a bullish note, with strong buying recorded in financial services, banking, IT, and metal stocks. Small caps and midcaps contributed heavily as well.

India's volatility index (VIX) nosedived by nearly 18%.

There are rumors of an impending US deal with China on trade but details are yet to come. The analyst added, "If a deal materializes that would be good for the global economy. But from an Indian perspective that would be slightly disappointing since we were expecting a trade deal with the US ahead of many nations including China."

Here are seven major movers of the Indian market on May 12:

1. Banking Stocks Strong Rally:

Bank Nifty touched an intraday high of 55,292.80. It traded at 55,159.85, higher by 1,564.60 points or 2.92%. Except for a slight loss in IndusInd Bank, all other banking stocks rallied. Axis Bank was the leader with over 4% surge, followed by IDFC First Bank and HDFC Bank with upside of 3.6% and 3.4%.

Stocks like PNB, ICICI Bank, Federal Bank, Canara Bank, Kotak Bank, and Bank of Baroda zoomed by 2.3% to 3.2%. SBI and AU Small Finance Bank were up by 2% each.

Nifty PSU Bank and Nifty Private Bank zoomed by 2.5% and 3.14%. Private banks outperformed.

2. Sharp Buying In Financial Stocks:

Financial services providers recorded incredible buying after PSUs like REC Ltd announced their Q4 results. Nifty Financial Services jumped by 3.30% to trade at 26,342.45, at the time of writing, which was near its day's high of 26,395.70.

Stocks like REC, PFC, Jio Financial Services, HDFC AMC, and Shriram Finance jumped from 4.5% to 6%. Bajaj Finance, Bajaj Finserv, ICICI Prudential, CholaFin, HDFC Life, and LIC Housing shares advanced by 3% to 3.5%.

3. Bull Run In Midcaps & SmallCaps:

Nifty Midcap 100 and Nifty Smallcap 100 indexes zoomed by 3.4% and 3.7% respectively.

In midcap stocks, RVNL, Escorts, Suzlon, Oracle Financial Services, and AB Capital, BSE, and IRED stocks jumped by 6% to 8%. The majority of midcaps were rallying.

In regards to small-caps, Reliance Power, IFCI, HFCL, Triveni Turbine, JWL, Sonata Software, Swan Energy, JBMA, FirstCry, MCX, Titagarh, and KPIL shares climbed by 7% to 11%.

4. IT Stocks Lifting Market:

Nifty IT index skyrocketed by 4% to trade at 37,193.45, which was near its intraday high of 37,286.70. Heavyweights like Infosys, Wipro, HCL Tech, LTIMindtree, Tech Mahindra and TCS were up by 3% to 4%. While tier-2 IT stocks like Persistent, Coforge, Oracle, and Mphasis zoomed by 4.5% to 7%.

5. Metal Stocks Shine:

Nifty Metal index jumped 4% to trade at 8,749.45, ahead of Tata Steel's Q4 results which is scheduled later on Monday. Adani Enterprises, Hindustan Copper, LLOYDSME, SAIL, Hindustan Zinc, NALCO, Vedanta, JSL, APL Apollo and Welspun Corp advanced by 4% to 7%.

COMEX Copper closed the week ~1% lower, touching a four-week low as subdued demand met with rising domestic supply. Manufacturing PMIs across key regions-including China, the US, and Europe-signalled a contraction in industrial activity, casting a shadow over the demand outlook for base metals. Meanwhile, robust ore production from South America compounded the supply glut, with the International Copper Study Group doubling its estimate of the global surplus to
~300,000 tonnes for the year, as per Axis Securities' weekly commodity note.

6. FIIs And DIIs Relentless Buying:

FIIs have been net buyers of Indian equities for sixteen days straight from April 15 to May 8th, before becoming net sellers of Rs 3,798.71 crore on May 9th. Despite the latest selloff, FIIs are net buyers of May month so far, with the inflow of Rs 7,857.23 crore.

FIIs are buyers for the third consecutive month to date. In April and March, their inflow was around Rs 2,735.02 crore and Rs 2,014.18 crore. They were net sellers in February and January with the outflow of Rs 58,988.08 crore and Rs 87,374.66 crore respectively.

FII favour large caps like ICICI Bank, HDFC Bank, Bajaj Finance, RIL, L&T, Bharti, Ultratech, M&M and Eicher are likely to lead the rally. Midcap IT and digital stocks are other segments to watch. Pharma stocks may come under near-term pressure from President Trump's latest announcement regarding reducing prices of drugs in the US, according to Vijayakumar.

Meanwhile, FPIs are buyers with inflow of Rs 14,167 crore in Indian equities from May 1st to May 11th. This is the highest buying of 2025, and also second consecutive monthly inflow. In April 2025, FPIs bought about Rs 4,223 crore worth equities. They were net sellers in March, February and January 2025 with outflow of Rs 3,973 crore, Rs 34,574 crore and Rs 78,027 crore, as per NSDL data.

Also, domestic institutional investors (DIIs) continue to be buyers of Indian stocks consistently. So far in May month, they have bought Rs 13,741.45 crore equities. DIIs are buyers since June 2023. YTD, DIIs have bought Rs 2,31,000.57 crore worth of domestic equities.

7. Q4 Results, Key Economic Data:

Stock specific action is also adding to the upside of market. Companies that will announce their results on Monday are --- Tata Steel, Bajaj Electricals, Carborundum Universal, CARE Ratings, Chalet Hotels, DCW, Garden Reach Shipbuilders & Engineers, Happiest Minds Technologies, JM Financial, Jyothy Labs, Krishna Institute of Medical Sciences, Kewal Kiran Clothing, Krsnaa Diagnostics, Man Industries (India), Morepen Laboratories, PG Electroplast, Raymond, Raymond Lifestyle, Sagar Cements, SRF, TD Power Systems, Thomas Cook (India), UPL, Usha Martin, Venkys (India), Ventive Hospitality, Vijaya Diagnostic Centre and Zaggle Prepaid Ocean Services.

Also, investors are positioning their investment ahead of CPI and IIP data scheduled for May 13th, followed by WPI inflation data on May 14th. Inflation data will further give clarity on RBI's monetary policy outcomes that will take place in June.