Are India-Pakistan tensions causing a stock market selloff?

Mumbai, May 9 (NationPress) The Indian equity markets faced a significant downturn on Friday, primarily due to escalating tensions between India and Pakistan that unsettled investors.

The market selloff was triggered after Pakistan launched eight missiles targeting Indian cities in retaliation for India’s precise strikes on terrorist camps located in Pakistan and Pakistan-occupied Kashmir (PoK). Thankfully, Indian air defense systems successfully intercepted all missiles.

At the close of trading, the Sensex plummeted by 880.34 points, equivalent to 1.10 percent, finishing at 79,454.47, while the Nifty dropped 265.80 points or 1.10 percent, settling at 24,008.

Rupak De from LKP Securities commented, "Nifty traders seemed to adopt risk-averse strategies amid the escalating India-Pakistan tensions, causing the index to fall from its recent consolidation phase."

However, the Nifty managed to remain above the 24,000 threshold, finding support near the 21-day exponential moving average (EMA), he noted.

Among the 30 stocks on the Sensex, ICICI Bank led the decline with a 3.09 percent drop during the intra-day trading session, followed by PowerGrid, which fell 2.61 percent, Bajaj Finance, which decreased 1.84 percent, and Reliance Industries, which also saw a 1.84 percent loss.

On a positive note, several stocks recorded gains. Titan topped the list with a 4.25 percent increase, followed by Larsen and Toubro at 4.02 percent, Tata Motors at 3.86 percent, State Bank of India at 1.39 percent, and Asian Paints, which edged up by 0.2 percent.

Investor sentiment took a hit across the board. The Nifty Bank, financial services, and realty indices each fell over 1 percent, with the real estate sector emerging as the weakest performer, plunging nearly 2 percent.

Other significant sectors such as auto, IT, energy, pharma, FMCG, healthcare, and oil and gas also ended the trading session in the red.

Despite the overall market weakness, a few sectors managed to defy the trend. Nifty PSU Bank, consumer durables, media, and metal stocks closed with gains, providing some support to the broader market.

In the wider market, the Nifty Midcap 100 index remained flat, while the Nifty Smallcap 100 declined by 0.61 percent.

Additionally, the rupee fluctuated between 85.90 to 85.35 amid the ongoing border tensions between India and Pakistan, with the potential for escalation keeping market participants on edge.

Jateen Trivedi from LKP Securities remarked, "Any new developments on the geopolitical front are likely to significantly influence the direction of the rupee."