On Monday, May 12, domestic equity markets experienced a sharp surge, with the Sensex soaring over 2,000 points and the Nifty crossing the 24,600-mark. This remarkable rally was driven by multiple factors, including easing geopolitical tensions between India and Pakistan, positive progress in US-China trade talks, and strong global cues that contributed to boosting investor sentiment across the world.

The Sensex jumped 2,089.33 points or 2.62%, reaching an intraday high of 81,543.80, while the NSE Nifty gained 669.3 points or 2.78%, touching 24,677.30. Adani Enterprises, Jio Financial Services, Trent, Shriram Finance, and Axis Bank were among the top gainers of the day, reflecting widespread optimism across various sectors.

India-Pakistan Ceasefire and Its Impact
One of the most significant factors behind the surge in the Sensex and Nifty was the ceasefire agreement between India and Pakistan, which was reached on Saturday. After days of intense cross-border missile strikes and drone attacks, the two nations agreed to halt all military actions across land, air, and sea.

This de-escalation has been viewed as a positive development for financial markets, as geopolitical tensions often create uncertainties that negatively affect investor sentiment. According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, such geopolitical cooling historically leads to positive market movements, as investors regain confidence.

The end of hostilities between the two nations removes a significant overhang on market sentiment, as tensions had led to disruptions, including flight cancellations and airport closures in the border regions. With this military de-escalation, investors are now focusing on opportunities in the domestic market, especially in aviation, hospitality, and defense sectors that were previously impacted.

US-China Trade Talks Drive Global Optimism
Another key factor that helped lift investor sentiment was the positive outcome of US-China trade talks. High-level negotiations between the two largest economies in the world were held in Switzerland, with both sides signaling progress toward resolving their trade dispute.

During these talks, US officials indicated that a potential agreement could aim at narrowing the American trade deficit, while Chinese authorities expressed optimism, with Vice Premier He Lifeng highlighting an "important consensus" reached during the discussions.

The joint statement issued from Geneva signaled a possible resolution to the prolonged trade tensions, which have had a major impact on global markets. Li Chenggang, China's Vice Commerce Minister, even hinted at "good news for the world," which further buoyed global market sentiment. The US stock futures rallied by over 2%, signaling optimism for a potential resolution to the US-China trade dispute.

Global Market Cues Fuel Domestic Rally
The global market cues were also a contributing factor to the domestic equity rally. Positive signals from Asian markets and a significant rise in Wall Street futures played a crucial role in lifting the Sensex and Nifty.

Ahead of the US-China trade deal announcement, US futures had surged by more than 2%, suggesting that investors were optimistic about the trade talks' outcome. This global optimism translated into a strong performance in Asian stock markets, which in turn supported the Indian equity market.

Key Sectoral Gains
The Sensex rally was not limited to a few stocks but was broadly spread across various sectors. Adani Enterprises, a prominent player in multiple industries, saw a significant jump in its share price, reflecting investor confidence in the infrastructure and energy sectors. Similarly, Jio Financial Services, Trent, Shriram Finance, and Axis Bank were among the top gainers in the session.

These stocks benefitted from both the positive domestic news and the global market sentiment. Jio Financial Services saw an uptick due to expectations of higher consumer spending and better economic conditions. Axis Bank, a leading private-sector bank, also experienced a surge in its stock price due to improving investor sentiment and signs of better profitability.

Conclusion
The rally in Sensex and Nifty reflects a confluence of positive factors, including geopolitical de-escalation, progress in US-China trade talks, and global market optimism. As investor sentiment remains strong, it is likely that the Indian stock market will continue to see positive movements, especially in sectors like banking, infrastructure, and consumer services.

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