Indian benchmark indices Sensex and Nifty50 traded lower on Friday as rising geopolitical tensions between India and Pakistan weighed on investor sentiment. The pressure followed reports of overnight drone and missile attacks along the western border, raising concerns about further escalation between the two nuclear-armed neighbours.
The BSE Sensex tumbled over 950 points to the day's low of 78,968, while the Nifty50 slipped below 24,000 level to the day's low of 23,935. Both indices had opened nearly 1.5% lower before trimming some of the early losses.
The total market capitalisation of all BSE-listed companies fell by Rs 4.95 lakh crore to Rs 413.55 lakh crore.
Read More: War drums with Pakistan may force FIIs to hit brakes after Rs 50,000 crore buying spree
Why is the stock market falling today?
1) Rising India-Pakistan conflict
The Indian Army reported that Pakistani forces launched multiple drone and munition attacks overnight along the western border. Blasts were heard in Jammu during a drone and missile attack on military installations in the Kashmir region on Thursday night, marking the second day of cross-border hostilities. The clashes have reportedly left nearly four dozen dead so far.
These developments follow the April 22 attack in Pahalgam that killed 26 civilians. India later responded with targeted missile strikes on suspected terror infrastructure across the border.
Despite the heightened tensions, Indian equities have shown relative resilience. While the Pakistan Stock Exchange has fallen over 13% since April 22, Indian markets have remained comparatively stable, backed by stronger domestic fundamentals and investor sentiment.
"Under normal circumstances, on a day like this, the market would have suffered deep cuts. But this is unlikely due to two reasons. One, the conflict, so far, has demonstrated India’s clear superiority in conventional war fare, and therefore, further escalation of the conflict will inflict huge damage to Pakistan. Two, the market is inherently resilient supported by global and domestic macros. Weak dollar and potentially weakening US and Chinese economies are good for the Indian market," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
2) FII flows at risk after record buying
Foreign institutional investors, who had been net buyers for 16 straight sessions, pouring in over Rs 50,000 crore since April 15, may pause or reverse their strategy amid rising geopolitical uncertainty.
With the India-Pakistan tensions pushing up the country’s geopolitical risk premium, the rupee also came under pressure. On Thursday, it posted its steepest single-day fall in over two-and-a-half years, closing at 85.58 against the US dollar. It weakened further to 85.88 in early trade on Friday.
“During any war-like scenario, investors usually flee toward safe-haven assets, causing capital outflows from the market and weakening the currency in the short term,” a forex trader noted.
“If the Indo-Pak tensions escalate and aggravate into an extended conflict, it will have an adverse impact on FII inflows too. An extended conflict will also impact India’s ongoing fiscal consolidation and may constrain the MPC’s ability to cut rates,” said Dr. Vijayakumar.
3) Broad-based sectoral sell-off and volatility spike
Selling pressure was visible across sectors. Nifty Bank, FMCG, Media, Metal, and Realty indices declined between 1–2%. In the broader market, the Nifty Midcap100 fell 1%, while the Smallcap100 dropped 2%, indicating cautious sentiment across the board.
India’s volatility gauge, the VIX, jumped over 6% to 22.27, reflecting rising uncertainty.
4) Technical indicators turn negative
“The Nifty turned weak in the short term after closing below its 5-day EMA on May 8,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. “Resistance is seen at 24,340–24,500 levels, while immediate support lies between 23,800 and 23,978.”
Traders are likely to remain cautious as markets assess the evolving situation.
5) Index heavyweights drag markets
Top index constituents including HDFC Bank, ICICI Bank, Reliance Industries, Infosys, and Bharti Airtel contributed nearly 670 points to the Sensex’s overall decline. Their losses magnified the broader market fall, reflecting cautious investor positioning.
While the situation remains fluid, markets will likely remain volatile in the near term as investors monitor geopolitical updates, alongside domestic earnings and global economic signals.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
The BSE Sensex tumbled over 950 points to the day's low of 78,968, while the Nifty50 slipped below 24,000 level to the day's low of 23,935. Both indices had opened nearly 1.5% lower before trimming some of the early losses.
The total market capitalisation of all BSE-listed companies fell by Rs 4.95 lakh crore to Rs 413.55 lakh crore.
Read More: War drums with Pakistan may force FIIs to hit brakes after Rs 50,000 crore buying spree
Why is the stock market falling today?
1) Rising India-Pakistan conflict
The Indian Army reported that Pakistani forces launched multiple drone and munition attacks overnight along the western border. Blasts were heard in Jammu during a drone and missile attack on military installations in the Kashmir region on Thursday night, marking the second day of cross-border hostilities. The clashes have reportedly left nearly four dozen dead so far.
These developments follow the April 22 attack in Pahalgam that killed 26 civilians. India later responded with targeted missile strikes on suspected terror infrastructure across the border.
Despite the heightened tensions, Indian equities have shown relative resilience. While the Pakistan Stock Exchange has fallen over 13% since April 22, Indian markets have remained comparatively stable, backed by stronger domestic fundamentals and investor sentiment.
"Under normal circumstances, on a day like this, the market would have suffered deep cuts. But this is unlikely due to two reasons. One, the conflict, so far, has demonstrated India’s clear superiority in conventional war fare, and therefore, further escalation of the conflict will inflict huge damage to Pakistan. Two, the market is inherently resilient supported by global and domestic macros. Weak dollar and potentially weakening US and Chinese economies are good for the Indian market," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
2) FII flows at risk after record buying
Foreign institutional investors, who had been net buyers for 16 straight sessions, pouring in over Rs 50,000 crore since April 15, may pause or reverse their strategy amid rising geopolitical uncertainty.
With the India-Pakistan tensions pushing up the country’s geopolitical risk premium, the rupee also came under pressure. On Thursday, it posted its steepest single-day fall in over two-and-a-half years, closing at 85.58 against the US dollar. It weakened further to 85.88 in early trade on Friday.
“During any war-like scenario, investors usually flee toward safe-haven assets, causing capital outflows from the market and weakening the currency in the short term,” a forex trader noted.
“If the Indo-Pak tensions escalate and aggravate into an extended conflict, it will have an adverse impact on FII inflows too. An extended conflict will also impact India’s ongoing fiscal consolidation and may constrain the MPC’s ability to cut rates,” said Dr. Vijayakumar.
3) Broad-based sectoral sell-off and volatility spike
Selling pressure was visible across sectors. Nifty Bank, FMCG, Media, Metal, and Realty indices declined between 1–2%. In the broader market, the Nifty Midcap100 fell 1%, while the Smallcap100 dropped 2%, indicating cautious sentiment across the board.
India’s volatility gauge, the VIX, jumped over 6% to 22.27, reflecting rising uncertainty.
4) Technical indicators turn negative
“The Nifty turned weak in the short term after closing below its 5-day EMA on May 8,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. “Resistance is seen at 24,340–24,500 levels, while immediate support lies between 23,800 and 23,978.”
Traders are likely to remain cautious as markets assess the evolving situation.
5) Index heavyweights drag markets
Top index constituents including HDFC Bank, ICICI Bank, Reliance Industries, Infosys, and Bharti Airtel contributed nearly 670 points to the Sensex’s overall decline. Their losses magnified the broader market fall, reflecting cautious investor positioning.
While the situation remains fluid, markets will likely remain volatile in the near term as investors monitor geopolitical updates, alongside domestic earnings and global economic signals.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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