The Indian stock market witnessed a significant rise on May 12, 2025, with the Sensex surging by 2,975 points (3.74%) and the Nifty 50 climbing by 916 points (3.82%). These gains are driven by several factors, including relief over the global trade tensions between the US and China, a significant drop in the Nifty Fear Index, and better-than-expected Q4 earnings by corporates. Let’s understand the three major reasons why the Indian stock market is rising today.
Key highlights:
- Sensex jumped 2,975 points (3.74%) and Nifty 50 rose 916 points (3.82%) on May 12, 2025
- The market rally was fueled by a mix of global trade relief, reduced market fear, strong earnings, and geopolitical calm
- The US and China agreed to reduce tariffs for 90 days, signaling a pause in trade tensions
- India VIX (Nifty Fear Index) fell by 15%, indicating lower fear and expected market stability
- Q4 FY25 earnings beat expectations: 564 companies reported median sales growth of 11.64% and PAT growth of 15.62%
Global Relief: US-China Trade Truce
The first and most significant reason behind the market surge is the global relief that was rising from the US-China trade tensions. After months of rising tensions and tariffs between the two economic giants, both countries have agreed to cut tariffs sharply for 90 days. China slashed its tariff on US goods from 125% to just 10%, while the US has reduced taxes from 145% to 30%.
This signaled a pause in the trade war and boosted investor confidence, which eventually helped stock markets regain the lost momentum.
Nifty Fear Index Crashes
Another factor that contributed to the Indian stock market’s surge is the significant drop in the Nifty Fear Index, which has fallen by 15%.
For context, Nifty Fear Index refers to the India VIX (Volatility Index), which measures the market's expectation of volatility in the near term. It shows the level of fear or stress among investors in the Indian stock market.
Key Points:
- India VIX is derived from the Nifty 50 index options prices.
- A higher VIX means investors expect greater volatility (more uncertainty or fear).
- A lower VIX suggests calm or confidence in the market.
For example, if the India VIX falls by 15%, it means investors are more optimistic and expect the market is likely to be more stable.
The recent decline suggests changes in investors' sentiments, as the fear of market volatility has improved.
Q4 Earnings Better Than Expected
The strong earnings results for the quarter ending March 2025, or Q4, can also be ascribed to one of the major reasons behind the market surge. Out of 564 companies that reported results for Q4 FY25, the median sales growth was reported at 11.64%, and profit after tax (PAT) grew by 15.62%, which is better than what analysts expected earlier. This shows that many businesses are doing well, even in a tough economic environment.
Note: Only companies with a market cap above ₹300 crore have been included.
Summary
The Indian stock market rally today is a result of multiple positive factors coming together. These factors include the relief of US-China trade tensions, a decline in market fears, and better-than-expected earnings. These elements have collectively created an environment where investors are feeling more confident about the future of the economy. However, it's important to remain cautious and informed about the market and make decisions accordingly.
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