This week, the Indian stock market is buzzing with energy, bouncing back with a massive rally, while gold prices are crashing. The India-Pakistan conflict and India-US tariff tensions are adding twists to the market story. What’s driving these changes? Should you invest in stocks or gold? In this blog, we’ll break down the current market situation in India for the week of May 13, 2025.
Indian Stock Market: A Big Rally This Week
The Indian stock market staged a stunning comeback this week, with the BSE Sensex and Nifty 50 soaring after a sharp sell-off last week. On May 12, the Sensex jumped 3,000 points (+3.39%), and the Nifty climbed 3.5%, marking the biggest single-day rally in four years. Here’s why the market is on fire:
1. India-Pakistan Ceasefire Boost
After a tense week of conflict following the April 22 Pahalgam attack and India’s Operation Sindoor missile strikes, a US-mediated ceasefire was announced on May 10. Despite reported violations, the ceasefire eased investor fears, triggering a gap-up opening with the Sensex rising over 1,300 points on May 12. Sectors like IT, defense, and mid-caps surged, with the Nifty Midcap 100 and Smallcap 100 gaining over 4%.
2. US-China Trade Deal Optimism
A 90-day pause in US-China tariffs, announced this week, boosted global markets, including India’s. IT stocks like Infosys, Wipro, and TCS rose up to 9% as US economic prospects improved. This global trade truce lifted Asian markets, and India’s Sensex outperformed peers, gaining momentum.
3. Strong Domestic Buying
Domestic investors poured ₹27 billion into Indian equities since October, cushioning the market against foreign outflows. Retail and institutional buying, especially in banking and IT, kept the Nifty above 24,000, with support at 23,900. The Nifty closed at 24,039 last week and is eyeing 25,200 this week.
4. Sectoral Strength
Defense stocks like Bharat Electronics surged due to India’s military response, while IT and banking stocks led the rally. FMCG, fertilizers, and two-wheeler stocks gained up to 7% as the India Meteorological Department predicted an early monsoon, boosting rural demand.
5. Technical Recovery
The Nifty cleared key moving averages this week, showing bullish sentiment. Analysts see resistance at 24,450–24,500 and a potential breakout to 24,700 if the ceasefire holds. The India VIX, a volatility gauge, dropped from 17.16 to near 12, signaling a “buy on dips” strategy.
