A Fortnight of Resurgence

Benchmark indices climbed around 4 per cent in a single trading session, driven by easing geopolitical tensions, prospects of a trade deal, renewed FII participation, and growing expectations of a rate cut

The past fortnight has been a long-awaited relief rally for investors, marking the strongest market performance since the downturn that began in late September 2024. Kicking off with a powerful trading session following the India-Pakistan ceasefire agreement, the BSE Sensex and Nifty 50 climbed nearly 4 per cent, setting an optimistic tone for the days ahead. Importantly, the rally wasn’t just a fleeting spike—it showed remarkable resilience and held its ground throughout the period.

A key catalyst for this uptrend was U.S. President Donald Trump’s remarks on exploring a potential zero-tariff trade deal with India, which fuelled hopes of deepening bilateral economic ties. Adding to the momentum, falling crude oil prices and a softening U.S. dollar contributed to an improved trade balance and a more favourable inflation outlook for India. On the domestic front, Q4FY25 corporate earnings largely met expectations, further supporting investor confidence.

In a significant fiscal development, the Reserve Bank of India announced a record surplus transfer of ₹2.69 lakh crore to the central government— underscoring strong economic fundamentals and boosting liquidity. Expectations are also building around a possible repo rate cut in the RBI’s upcoming June policy meeting, adding another layer of support for the ongoing market optimism. After enduring significant declines in recent months, broader market indices saw a sharp revival on the back of renewed investor enthusiasm.

Strong buying interest propelled the BSE Small-Cap Index to surge over 10 per cent, while the BSE Mid-Cap Index registered an impressive 7 per cent gain over the fortnight. The rally was notably broad-based, marked by multi-sector participation. Cyclical sectors such as real estate, metals, and power led the charge, delivering standout performances. In contrast, traditionally defensive sectors like FMCG and healthcare posted relatively modest gains.

Foreign Institutional Investors (FIIs) have finally turned net buyers, infusing over ₹4,000 crore into Indian equities during the fortnight. Domestic Institutional Investors (DIIs) continued to provide robust support, recording a substantial net inflow of more than ₹20,000 crore over the same period. The Nifty VIX—often referred to as the market’s ‘fear gauge’—plunged more than 20 per cent over the past two weeks,indicating a sharp decline in investor anxiety.A falling VIX typically signals lower expected volatility, suggesting that investors are now pricing in a more stable and positive outlook for the near term. The upcoming RBI policy meeting and the finalisation of the India-U.S. trade agreement are poised to be critical catalysts for the market’s next move. Stay tuned for further updates.