By Bharath Rajeswaran and Vivek Kumar M
(Reuters) -India’s benchmarks jumped over 3% and were on track to log their best session in almost a year on Monday after the country reached and held a ceasefire with Pakistan over the weekend, following the worst cross-border clashes in nearly three decades.
The Nifty 50 and the BSE Sensex gained about 3.25% each to 24,787.8 and 81,958.04, respectively, as of 1:12 p.m. IST, on track to recover the 1.5% they lost since India’s strikes on Pakistan on Wednesday.
If gains hold, the benchmarks will log their best single-day jump since June 5, 2024, when markets surged after the ruling National Democratic Alliance’s victory in the national elections.
Meanwhile, Pakistan’s stock exchange halted trading on Monday for an hour, after the benchmark KSE-100 share jumped 8.84% in early trade. It was last up 9.4%.
The easing of hostilities allows focus to return to growth and trade in the world’s fifth largest economy, analysts said, adding that the conflict will not have a material impact on India’s economy.
“Assuming the ceasefire is adhered to by both countries, we keep all our macro forecasts unchanged,” Barclays said in a note.
“We see India grow at a solid 6.5% year-on-year in FY25-26, benefiting from relative insulation to global trade uncertainty and strong progress in ‘trade talks’ with the US administration,” it added.
On Monday, all 13 major sectors logged gains. The broader small- and mid-caps rallied 4% and 3.6%, respectively.
The volatility index, nicknamed the “fear gauge”, was set to snap an eight-day rising streak, offering some relief to investors as a fragile ceasefire seemed to hold after initial violations.
“With the first sign of de-escalation, we are likely seeing the floodgates open in terms of foreign inflows as the global risk-sentiment is also turning positive on easing trade tensions,” said Abhishek Goenka, founder and CEO of IFA Global.
FPIs have been net buyers of Indian stocks so far in May, purchasing $1.7 billion worth of shares, as of Friday’s close.
Tourism and travel-related stocks, which were the worst hit due to the conflict, surged 5.5% on Monday.
(Reporting by Vivek Kumar M and Bharath Rajeswaran in Bengaluru; Editing by Sumana Nandy and Sonia Cheema)
