The Indian equities market faced selling pressures on Friday, as the benchmark indices closed over 1% lower amid escalating tensions with Pakistan. The 50-stock Nifty 50 index hit the day's low of 23,935.75 points, while the BSE Sensex touched a low at 78,968.34 points.
Nifty struggled to erase losses as investors resorted to selling equities as both weekly options expiry and increasing tensions with the neighbouring country weighed on overall market sentiment. While the overall market was subdued, the decline in the broader market indices was less steep compared to the headline indices. Nifty Midcap 100 closed almost flat, while Nifty Smallcap 100 closed 0.6% lower.
More than half of the stocks in the Nifty 50 index ended in red, with six stocks closing over 2% down. Power Grid Corp. and ICICI Bank closed 3% lower, and were the worst performers in the index today. On the other hand, Tata Motors, Larsen & Toubro and Titan Company closed 4% higher today.
Almost all the sectoral and thematic indices also closed in red with Nifty Financial Services and Nifty Realty down 2%. Nifty PSU Bank, Nifty Consumer Durables, Nifty Media and Nifty Indian Defence indices ended the session in green. Nifty India Defence index closed over 3% higher.
Except for Cyient DLM, all the constituents in the Nifty India Defence index closed higher. Zen Technologies, Bharat Dynamics, Astra Microwave Products, Paras Defence and DCX Systems closed over 5% higher today. Shares of Mumbai-based IdeaForge hit the upper circuit today and closed 20% higher on the NSE. The company manufactures unmanned aerial vehicles.
Indian stock markets opened sharply lower on 9 May, with benchmark indices Sensex and Nifty 50 falling around 1% at the open, as escalating border tensions between India and Pakistan weighed heavily on investor sentiment. Most sectoral indices also slipped into negative territory, reflecting widespread caution across the board.
The decline had been widely anticipated, with early cues from GIFT Nifty suggesting a sharp gap-down start for domestic equities. Overnight, the index had shed over 2% following reports that Pakistan had launched drone strikes across Jammu and Kashmir, with further attempts to target military installations in Punjab, Rajasthan, and Gujarat.
India’s immediate and firm military response heightened fears of a broader conflict between the two nuclear-armed neighbours, contributing to a risk-off mood across markets. As expected, the volatility gauge, India VIX, jumped 6% in early trade to breach the 22 mark, reflecting the elevated uncertainty.
Despite the negative sentiment, the market’s fall remained arrested. According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the extent of the fall was limited for two key reasons.
“First, the conflict so far has underlined India’s conventional military superiority, suggesting that any further escalation could prove far more damaging for Pakistan,” he explained. “Second, the broader market continues to draw strength from supportive global and domestic macroeconomic conditions.”
He added that factors such as a weakening dollar, softening global growth in the US and China, robust domestic GDP forecasts, and an easing interest rate environment have all contributed to a positive outlook for Indian equities. This has also driven consistent foreign institutional investor (FII) buying over the past sixteen sessions.
Given the current backdrop, Vijayakumar advises investors to not panic and take a knee-jerk exit from the market now, but rather wait and watch for the dust to settle.
