Sensex, Nifty Surge Nearly 3% Amid Easing Border Tensions and Pharma Sector Rebound

Market Rally Led by Easing Geopolitical Tensions and Positive Earnings

On May 12, Indian benchmark indices Sensex and Nifty posted significant gains, driven by easing geopolitical tensions between India and Pakistan and a strong rebound in key sectors such as pharma, real estate, and IT. The rally was further fueled by positive global cues, with investors gaining confidence after both nations agreed to a ceasefire, alleviating concerns surrounding the region’s stability.

As a result, Sensex surged 2,276.30 points, or 2.86%, reaching 81,730.77, and Nifty climbed 715.90 points, or 2.98%, to 24,723.90. The market breadth was exceptionally strong, with 3,178 stocks advancing, 373 declining, and 105 remaining unchanged.

Highlights:

• Sensex and Nifty posted gains of 2.86% and 2.98% respectively

• Market breadth was robust with the majority of stocks advancing

• Rally fueled by easing geopolitical tensions, positive global cues, and strong earnings reports

Pharma Sector Rebounds Amid Trump’s Drug Price Cut Proposal

The Nifty Pharma index, which initially saw a dip of 2% in reaction to comments by US President Donald Trump about potential drug price cuts, managed to recover as the session progressed. Trump’s remarks, which included pledges to reduce US drug prices by up to 80%, sparked concerns in the pharmaceutical sector. However, market participants largely dismissed the impact, citing previous attempts by Trump to implement similar measures during his first term, which had failed.

Pharma analysts believed that generic drug makers in India would not be significantly affected by these price cuts. Nitin Bhasin, Head of Institutional Equities at Ambit, noted, “This appears to be a knee-jerk reaction, and we expect the sentimental impact to remain limited.” The Nifty Pharma index ended the day with a strong recovery, despite the initial losses.

Highlights:

• Nifty Pharma index rebounded after initial losses following Trump’s drug price cut pledge

• Analysts downplayed the potential impact on Indian generic drug makers

• Trump’s earlier attempts at similar measures were ineffective, calming investor fears

Strong Sectoral Performance: Realty, IT, and Midcap Stocks Shine

Aside from the pharma sector, other key sectors also contributed to the market’s robust performance. The Nifty Realty and Nifty IT indices were among the top performers, each gaining more than 4%. Both indices benefited from positive earnings growth and upbeat investor sentiment, reflecting optimism for the domestic economy and corporate earnings.

The broader market also saw outperformance from midcap and smallcap stocks, which surged by 3%, indicating strong participation across all segments of the market.

Highlights:

• Nifty Realty and Nifty IT indices surged by more than 4%

• Midcap and smallcap indices rose by 3%, outperforming the benchmarks

• Strong earnings and investor confidence supported broad-based rally

Analysts Optimistic About Future Market Trends

Market experts attribute the bullish sentiment to a combination of factors, including strong Q4 earnings reports, steady Foreign Institutional Investor (FII) and Domestic Institutional Investor (DII) inflows, and expectations of continued capital inflows into Indian markets. Analysts believe that these positive trends could continue for the foreseeable future, supporting both equity markets and corporate growth.

Harish Krishnan, Co-CIO and Head of Equity at Aditya Birla Sun Life AMC, expressed optimism about future foreign investor activity: “We will likely witness a new phase of foreign investor activity over the next three to four years. Given the global macro backdrop, we could see substantial capital inflows. Corporate earnings also have the potential to grow at a 12% rate over the next 12 to 18 months.”

Highlights:

• Strong earnings reports and institutional inflows boost market sentiment

• Analysts expect continued foreign capital inflows and robust earnings growth

• Corporate earnings may grow by 12% over the next 12 to 18 months

India’s Market Outlook Remains Positive Amid Geopolitical and Economic Factors

With geopolitical tensions easing and favorable global cues, Indian markets have regained momentum, reinforcing the outlook for continued growth. The easing of border tensions between India and Pakistan and the rebound in critical sectors has helped restore investor confidence, and experts remain optimistic about the medium-term trajectory for the Indian stock market. The Sensex and Nifty’s strong gains reflect the broader optimism in the market, which is supported by both domestic and international factors.

Highlights:

• Geopolitical tensions easing between India and Pakistan provide positive outlook for markets

• Continued optimism about India’s economic and market growth prospects

• Positive investor sentiment fueled by strong earnings, sectoral rallies, and inflows from FIIs and DIIs