Benchmark indices Nifty and Sensex surged with substantial gains on Monday, as bulls took charge, driven by strong buying in realty, banking, and auto stocks.

Market volatility eased significantly, with the India VIX plunging 18 percent after US President Donald Trump announced tariff exemptions for smartphones and computers, and hinted at a possible pause on auto tariffs.

As of 2:45 pm, the Sensex was up 1,560.11 points or 2.08 percent at 76,717.37, and the Nifty was up 492.75 points or 2.16 percent at 23,321.30. About 2893 shares advanced, 666 shares declined, and 125 shares unchanged.

"Today’s rally is more of a relief bounce than a sign of sustained bullishness," said Aishvarya Dadheech, Founder and CIO of Fident Asset Management, in a conversation with Moneycontrol.

He attributed the rebound to global markets regaining lost ground and easing concerns around tariffs. “The market loves certainty,” he noted, adding that uncertainty around trade conflicts—especially between the US and China—will continue to weigh on sentiment.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said short-covering would keep markets strong through the day.

However, he cautioned that the uncertainty triggered by Trump remains very much alive. "More volatility could be on the horizon, especially with Trump’s threat of sectoral tariffs," he said. The Indian pharmaceutical sector, in particular, could face renewed pressure.

All sectoral indices were in the green. The FMCG index inched back into positive territory after a brief spell of profit booking earlier in the day.

The Nifty Realty index was the top gainer, rising over 4.5 percent, followed by Nifty Auto (3.4 percent) and Nifty Metal (3 percent). Nifty Bank, IT, Infra, Oil & Gas, and Pharma all rallied more than 2 percent.

Mid and small-cap stocks joined the uptrend, with the Nifty Midcap 100 and Nifty Smallcap 100 indices gaining 2.5 percent and 2.84 percent, respectively.

On the broader market, Dadheech sees selective opportunities in small-caps, supported by better relative valuations and stronger earnings in specific pockets. However, he warned that the space remains vulnerable to global risks.

“Investors must be cautious and take a three-year view, focusing on stock-specific strategies rather than a blanket approach,” he advised.

Tata Motors jumped over 4 percent after Trump signalled a potential exemption for automakers grappling with high import tariffs.

The US President said he was "looking to help some of the car companies" that are shifting production back to the US from countries like Mexico and Canada. Notably, Tata Motors had announced a halt to US shipments last week.

Adani Green Energy Ltd also rallied nearly 5 percent after announcing a 30 percent year-on-year increase in operational capacity for FY25, reaching 14.2 GW.

The company expects to hit 15.2 GW soon, having added 3,309 MW through greenfield projects across Gujarat, Rajasthan, and Andhra Pradesh. This includes 2,710 MW of solar and 599 MW of wind energy.

"From a technical standpoint, the 22,600–22,500 zone is expected to act as key support in case of a pullback, followed by the 22,200–22,000 region if global conditions worsen," said Sameet Chavan of Angel One.

On the upside, he sees intermediate resistance at 23,000, with a critical hurdle near 23,200–23,300, which aligns with the 89-day exponential moving average (DEMA).

"A breakout above these levels could ignite a fresh wave of bullish momentum," Chavan added, noting that the ongoing earnings season and global cues will be pivotal in steering the market’s direction.

Top gainers on the Nifty included IndusInd Bank, Shriram Finance, L&T, Adani Enterprises, and Axis Bank. ITC and HUL were the only laggards in the Nifty pack.

Source: moneycontrol