Sensex, Nifty rally: Investors add Rs 11.32 lakh crore; 7 factors driving stock market

Indian benchmark indices opened sharply higher on Monday on the back slew of positive global and domestic news flow over the weekend. The total market capitalization of all the BSE-listed companies increased to Rs 427.84 lakh crore as investors added Rs 11.32 lakh crore to their kitty, compared to its previous close at Rs 416.52 crore.

Kicking off the week on a strong note, BSE Sensex soared 2,015.54 points, or 2.54 per cent to 81,470.01, while NSE’s Nifty50 index rallied 625.6 points, or 2.60 per cent to 24,633.60. India VIX crashed more than 20 per cent to 17.21-mark. BSE midcap and smallcap indices outperformed the headline peers, adding 3 per cent each.

Here are the seven key factors that are pushing the stock markets higher:

India-Pakistan tensions ease
De-escalating the tensions at the borders, India and Pakistan agreed for the ceasefire after a deadly combat last week. DGMOs of both the army’s are likely to connect on hotlines today. Prashanth Tapse, Senior VP (Research) at Mehta Equities said that a thawing of the relationship between India & Pakistan is likely to trigger a massive rebound for benchmark indices said

US-China trade deal
The United States has reached a trade agreement with China after two days of high-level negotiations in Geneva, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer announced on Sunday. The details of the deal shall be announced officially later today.

The trade deal announcement between US and UK and reports that US and Chinese officials meeting in Switzerland on the weekend for trade discussions, paved the way for broader negotiations and tariff de-escalation, supported investor sentiment, said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Russia-Ukraine war to end?
Russian President Vladimir Putin proposed direct talks with Ukraine on May 15 in Istanbul, Türkiye with Ukraine counterpart Volodymyr Zelensky to end the war between the two nations. Ceasefire between the two war-hit nations is likely to ease the geopolitical concerns globally.

Early arrival of Monsoon
The southwest monsoon is likely to reach Kerala on May 27, earlier than the usual date of June 1, the India Meteorological Department (IMD) said on Sunday, May 11. The early onset indicates a potential boost to Kharif crop sowing, which bodes well for the agro-driven rural economy of India.

Inflation numbers
Markets will closely monitor key domestic macroeconomic indicators, CPI and WPI inflation data. The general consensus anticipates a potential softening in inflationary pressures. Inflation will be in focus as investors get their first look at April prices with the Tuesday release of the Consumer Price Index (CPI).

FIIs Buying
Foreign investors continue to show confidence in the country’s equity market, infusing Rs 14,167 crore so far this month, largely driven by favourable global cues and robust domestic fundamentals. This inflow has come despite the ongoing military tensions between India and Pakistan.

On the economy front, India and the UK signed a free trade agreement, which ensures comprehensive market access for goods, covering all of India’s export interests. FPI flows are expected to remain volatile, said Shrikant Chouhan, Head Equity Research, Kotak Securities. “FPI flows to date in May 2025 were positive for all key emerging markets,” he said.

Technical factors
The formation of an inverted hammer on the daily chart signals a possible trend reversal to the downside, although confirmation is still awaited, said Hardik Matalia, Derivative Analyst at Choice Broking.

“Key support is now placed at 23,950, and a breakdown below this level could trigger further downside toward the 23,850–23,700 zone. On the upside, immediate resistance is seen at 24,350 and 24,500. A breakout above these levels may pave the way for a rally toward 24,700,” he said.