India-Pakistan Ceasefire: What to Expect on Tuesday in Indian Share Market
Date: Saturday, May 10, 2025
By: The Dainik News Team
After a turbulent week driven by conflict headlines, India and Pakistan’s sudden ceasefire agreement is set to shape the mood on Dalal Street this coming Tuesday. Here’s what investors, traders, and market-watchers need to know.
Market Recap: Volatility and Losses Amid Escalation
The past week was nothing short of a rollercoaster for Indian equities. As tensions escalated between India and Pakistan, the Nifty 50 and BSE Sensex both suffered sharp declines. By Friday, Indian shares had lost about $83 billion in market value over just two sessions, with the Nifty 50 closing down 1.1% but holding above the 24,000 mark, and the Sensex dropping below 80,000.[1][3][9]
The volatility index, often called the 'fear gauge,' surged for the eighth straight session, reflecting heightened anxiety among investors. Twelve of thirteen major sectors ended the week in the red, and the rupee saw its steepest one-day drop in over two years.[1][3]
Ceasefire Announced: A Game Changer for Sentiment?
On Saturday, May 10, India and Pakistan agreed to a full and immediate ceasefire, with both governments confirming the halt of all military actions.[4][5][6] This dramatic shift comes after days of missile strikes, cross-border shelling, and global calls for restraint.
The ceasefire is widely seen as a positive surprise by markets, which had been bracing for further escalation and potential economic fallout. With the immediate threat of war receding, analysts expect a sharp improvement in market sentiment as trading resumes on Tuesday after the weekend.[2][8]
What to Watch for on Tuesday, May 13, 2025
1. Relief Rally Likely: Historically, Indian markets have rebounded quickly after geopolitical shocks. Data from previous India-Pakistan standoffs show that the Nifty typically corrects by about 5% during conflict, but then posts double-digit gains within six months.[2] With the ceasefire in place, a relief rally is expected, especially in blue-chip and large-cap stocks.
2. Volatility May Persist: While the worst-case scenario appears averted, traders should expect some volatility as the market digests new developments and monitors for any unexpected flare-ups.[1][3]
3. Sector Rotation: - **Defence stocks** may see continued interest, as government capex in the sector is likely to accelerate regardless of escalation.[2] - **Banks, power, logistics, housing finance, and EPC firms** are flagged by analysts as sectors with strong fundamentals and attractive valuations. - **Auto stocks** have already shown resilience, with Tata Motors leading gains last week due to optimism over global trade developments.[1]
4. Foreign Investment Flows: Despite the turmoil, India attracted $5 billion in equity inflows over the past two weeks.[7] If stability holds, foreign portfolio investors (FPIs) and domestic funds are expected to remain active buyers, supporting the market’s recovery.[2][7]
5. Rupee and Commodities: The rupee, which saw a sharp drop last week, could stabilize or even strengthen if peace prevails.[1][3] Gold prices, which spiked on safe-haven demand, may cool off as risk appetite returns.
Expert Views: Don’t Panic, Focus on Quality
Market experts urge investors not to make hasty decisions based on headlines. “Long-term investors should keep a watchlist of promising stocks and sectors. There’s no need to panic or get caught in FOMO. Instead, focus on high-quality stocks with strong growth potential,” advises Dr. Vikas Gupta.[2]
Amnish Aggarwal from Prabhudas Lilladher echoes this sentiment: “If there is no further escalation, things will settle and the market can move upward.”[2]
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit, points out that the Indian market’s resilience is supported by strong global and domestic fundamentals, as well as robust FII inflows.[2][3]
“Historically, markets have dropped during such events but have rebounded on all occasions. Buy-the-dip is the best strategy if equity markets decline.”
– Venugopal Garre, Bernstein[2]
Key Risks and What Could Change the Outlook
- If the ceasefire holds and no new incidents occur, Indian equities are well-positioned for a rebound.
- Any renewed escalation or breakdown in talks could trigger another wave of selling and volatility.
- Global factors-such as US-China trade talks and global interest rates-will continue to influence market direction.
What Should Investors Do Now?
- **Stay invested:** Long-term investors should remain calm and avoid panic selling.
- **Look for opportunities:** Volatility often creates buying opportunities in quality stocks.
- **Monitor news:** Keep an eye on developments from the India-Pakistan border and any updates on the ceasefire.
- **Diversify:** Spread investments across sectors to manage risk.
- **Consult advisors:** When in doubt, seek professional guidance.
Conclusion: A Turning Point for Markets and the Region
The sudden ceasefire between India and Pakistan has the potential to reset the mood on Dalal Street. While last week’s volatility rattled nerves and erased billions in market value, the prospect of peace offers hope for a swift recovery. As always, markets will look beyond headlines to focus on fundamentals, global cues, and the resilience of the Indian economy.
As trading resumes on Tuesday, all eyes will be on whether the ceasefire holds and if Indian equities can bounce back. Stay tuned to The Dainik for the latest updates, expert analysis, and actionable insights for investors navigating these uncertain times.
- Reuters, "Indian shares fell for a second straight session on Friday, losing about $83 billion in market value, as intensified military action between India and its neighbouring Pakistan rattled investors." (May 9, 2025). [link]
- Economic Times, "India-Pakistan war shadow 'receding'? How to read the market mood and which stocks to buy" (May 8, 2025). [link]
- Times of India, "Operation Sindoor impact on stock market today: Nifty50 ends below 24,050; BSE Sensex tanks 880 points on India-Pakistan tensions" (May 9, 2025). [link]
- Reuters, "India and Pakistan agree to an immediate ceasefire" (May 10, 2025). [link]
- CNBC, "India and Pakistan agree to immediate ceasefire" (May 10, 2025). [link]
- Economic Times, "India and Pakistan agree to a full and immediate ceasefire, next talks on May 12" (May 10, 2025). [link]
- Business Today, "Impact of rising India-Pakistan tensions on stock market: Samir Arora decodes" (May 9, 2025). [link]
- YouTube, "Will Markets Rally After India-Pak Ceasefire?" (May 10, 2025). [link]
- Hindu Business Line, "Share Market Highlights 9 May 2025: War fears hit Dalal Street" (May 9, 2025). [link]