Indian Stock Market Bounces Back After Border Tensions Cool Down
The Indian stock market is seeing a strong recovery as border tensions ease, company earnings beat expectations, and foreign investors return with heavy inflows. With signs of growth and stability, experts believe the rally could continue.
11:50 AM May 12, 2025 IST
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Aakash Khuman
The deescalation at the western borders and improving odds of favourable trade deals with the US and EU have ensured that investors have a cocktail of optimism brewing.
Indian Stock Market: After recent worries about conflict between India and Pakistan, peace talks have helped calm the situation. This positive development has lifted investor confidence. On May 12, the Nifty 50 rose over 2.5% in early trade, showing a strong market comeback after last week’s cautious pause.
Strong Q4 Earnings Bring Optimism
The fourth-quarter results from Indian companies are better than expected. So far, 472 companies have reported a 12.4% rise in net profit compared to last quarter — the best growth in two years. Year-on-year profit is also up 10%. Revenues have grown too, and though profit margins are slightly lower, they remain healthy at 21.35%.
Foreign Investors Make a Big Comeback
Foreign institutional investors (FIIs) are returning to Indian markets. Since mid-April, they have invested around $5.8 billion, making it four weeks in a row of positive inflows. India is now among the top emerging markets, along with Taiwan and Brazil.
In just the last two weeks, India received more than $1 billion in net inflows, with a big part of it coming into India-focused funds. Many global investors are shifting funds from China to India, showing strong belief in India's growth story.
Trade Deal Hopes Add More Energy
Hopes of new trade deals with the US, UK, and EU are creating fresh excitement. Sectors like manufacturing, electronics, pharma, auto, and industrials are expected to benefit the most.
Defence stocks are also getting attention as India is expected to increase defence spending. However, investors need to be careful since many of these stocks are already expensive, and growth in this area will depend more on execution than just good news.
What Should Investors Do Now?
The market has risen quickly, and some experts believe a lot of the good news may already be priced in. But that doesn't mean it's time to exit. Instead, investors should stay careful, avoid chasing high prices, and focus on individual quality stocks. Staying calm and smart could still bring good returns.
Also Read: Sensex Down 800 Points Amid India-Pakistan Tensions, Market Still Resilient
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