Indian Stock Market Soars: ₹26L Crore Wealth Gain, ₹18,620Cr FII Inflows & $1.58B Yes Bank-SMBC Deal

Indian markets have been on a tear in mid-May 2025, driven by a wave of positive news. A surprising India-Pakistan ceasefire and easing US-China trade tensions ignited a broad rally, pushing benchmark indices sharply higher. Over May 12–18, the Sensex and Nifty 50 each climbed several percentage points, collectively adding about ₹26.5 lakh crore in investor wealth. Foreign funds also swooped back into equities, and Yes Bank made headlines with a massive overseas investment. Let’s unpack these three big stories.

Stock Market Rebound: ₹26 Lakh Crore Wealth Gain

The stock market rally was fueled by easing geopolitical risks and strong economic signals. The surprise India-Pakistan ceasefire “slashed geopolitical tension overnight,” and April inflation unexpectedly fell to a six-year low (3.16%), raising hopes of a dovish RBI policy. Global factors helped too: a US-China tariff truce improved risk appetite. Together these factors sparked a surge – the Sensex rocketed ~2,876 points and the Nifty jumped ~4.2% in just one week. In practical terms, analysts estimate this rally minted nearly ₹26.5 lakh crore in new investor wealth across market caps. (Midcaps and smallcaps rose even more, fueling a dose of FOMO.)

The drivers of the rally were clear:

Geopolitical relief: The India-Pakistan ceasefire eased a major overhang on markets.
Global tailwinds: A pause in US-China trade conflicts and cooler oil prices boosted optimism. April’s sharp drop in inflation (to 3.16%) was a surprising bonus.
Market momentum: With risk fears subsiding, investors piled back into stocks. Even large-caps saw fresh buying, and the India VIX plunged (measuring fear) by about 24% in one week.

Overall, this week’s bounce took indices near their record highs. Nifty was within about 5% of its all-time peak by mid-May, and many investors were left wondering if the rally can continue or if a pullback might follow.

FIIs Return: ₹18,620 Crore in May

Foreign institutional investors (FIIs) joined the party. After months of net selling, FIIs pumped a net ₹18,620 crore into Indian stocks in May (up to May 16). That is a dramatic turnaround: April had only ₹4,223 crore of inflow and early 2025 saw heavy outflows. The reasons mirror the market rally: global calm and strong local fundamentals. As one report notes, foreign inflows were “driven by a combination of global tailwinds and improving domestic fundamentals”.

Key points about the FII flows:

Renewed confidence: The India-Pak ceasefire and US-China trade truce improved global risk appetite. Investors felt safer putting money into emerging markets like India.
Domestic strengths: India’s robust growth outlook, low inflation, and stable monetary policy made the market attractive. Analysts say continued GDP growth and healthy corporate earnings have boosted India’s case for investment.
Impact on markets: These inflows added fuel to the rally. By mid-May, FIIs had already bought nearly ₹15,925 crore of stocks in just that week, helping propel the indexes upward. Domestic mutual funds (DIIs) also added another ~₹9,557 crore, meaning nearly all segments of the market took part.

In short, FIIs are back – at least for now. The ₹18,620 crore infusion is the first big monthly FII inflow in a while, signaling “renewed confidence” among global investors.

Yes Bank-SMBC Deal: $1.58B Investment

In a blockbuster cross-border deal, Japan’s Sumitomo Mitsui Banking Corporation (SMBC) agreed to buy a 20% stake in Yes Bank. SMBC will pay ₹134.8 billion (about \$1.58 billion) for the shares. Under the agreement, SMBC will acquire 13.19% of Yes Bank from SBI (the bank’s largest shareholder) and 6.81% from a group of private banks. This is the largest cross-border banking deal in India’s history – a clear sign of confidence in Yes Bank’s turnaround under new leadership.

Key highlights of the Yes Bank deal:

Stake: SMBC is buying a total 20% of Yes Bank (13.19% from SBI and 6.81% from other banks).
Price: The transaction is valued at ₹134.8 billion (\~\$1.58 billion).
Record-breaking: This deal “marks the largest cross-border banking deal in India’s financial sector” (Yes Bank itself called it India’s biggest such deal). In short, it’s a game-changer.

Yes Bank’s stock reacted strongly – shares jumped about 4–5% on the news. Management said the investment “marks a pivotal step in our next phase of growth”. The deal still needs regulatory approvals (from RBI, CCI, shareholders, etc.), but once completed, SMBC will be Yes Bank’s largest shareholder, giving the bank a huge capital boost and foreign backing.

Each of these developments – the stock-market surge, the FII inflows, and the Yes Bank investment – reflects growing optimism about India’s economy and markets. Together they paint a picture of strong domestic momentum and renewed foreign interest. As an investor in Indian stocks, mid-May 2025 was certainly a time to take notice of these big moves. Whether this bullish trend continues will depend on how global and local news unfold, but for now the market mood is upbeat and the headlines are hard to ignore.