Indian stocks rose sharply in early trade on Monday as a U.S.-brokered ceasefire between New Delhi and Islamabad appeared to be holding, marking a deescalation in their recent armed conflict.
The Nifty 50 surged 2.8% to 24,692.90 points, while the BSE Sensex 30 rose 2.5% to 81,397.0 points by 09:57 AM IST (04:27 GMT).
The Nifty had fallen some 1.5% in the past three sessions, as India and Pakistan engaged in their worst fighting in nearly three decades. Tensions between the nuclear armed neighbors rose after India struck several alleged terrorist sites in Pakistan, in retaliation for a deadly attack in Indian Kashmir in April.
U.S. President Donald Trump announced over the weekend that Washington had brokered a ceasefire between India and Pakistan. While initial reports showed both New Delhi and Islamabad accusing each other of multiple violations, military action in Kashmir and along the Indo-Pak border was seen deescalating by Sunday.
Focus was now on whether the ceasefire will hold, and whether tensions will fall further between the two countries.
Two major points of contention are the Indus Water Treaty- which reports showed remained suspended despite the ceasefire- and a U.S. offer to broker negotiations over Kashmir, which was seen drawing discomfort from New Delhi.
India had pulled out of the Indus Waters Treaty in April, blocking the flow of key water sources into Pakistan.
In Indian stocks, while most sectors were positive, the Nifty Pharma index fell 0.8%, weighed chiefly by major stocks with large exposure to the United States. Losses in Asian drugmakers came after Trump said he will sign an executive order to slash U.S. drug prices.
