India-Pak conflict rattles market: Sensex skids 589pts; SMIDs slide over 2%

Stock market closing bell, Friday, April 25, 2025: Worsening diplomatic ties between India and Pakistan following the Pahalgam terror attack, along with ceasefire violations across the Line of Control (LoC) by Pakistan, heightened volatility in the Indian equity markets, leading the benchmarks to end in negative territory on Friday. The markets, however, posted an advancement on a weekly basis.  Mid-smallcap stocks bore the brunt of the sell-off, driven by their elevated valuations and growing concerns over potential earnings downgrades following a muted start to the earnings season. Among the sectoral front, barring IT, all others were under pressure, with PSU banks and metals being the worst hit. 

The heightened geopolitical uncertainty, analysts said, has led investors to adopt a risk-off approach, triggering profit-booking after the recent sharp rally. Furthermore, the markets appeared slightly overstretched following the vertical rise, prompting traders to reduce exposure.

 

 

The BSE Sensex shed 588.90 points or 0.74 per cent to settle at 79,212.53, and the NSE Nifty50 dropped 207.35 points or 0.86 per cent to 24,039.35, led by a sell-off in index heavyweights Axis Bank, Bharti Airtel, State Bank of India (SBI), and HDFC Bank. However, on a weekly basis, the Nifty advanced 0.78 per cent, and the Sensex gained 0.83 per cent.

 

Among individual stocks, Shriram Finance, Trent, Adani Ports, Adani Enterprises, and Eternal (erstwhile Zomato) were the top laggards among the Nifty50 constituents, ending down in the range of 3.67–8.13 per cent. Meanwhile, SBI Life, Tech Mahindra, Tata Consultancy Services (TCS), UltraTech Cement, and Infosys were among the nine constituent stocks that managed to eke out gains of up to 5.15 per cent.

 

Markets ended in favor of the bears as 2,428 out of the 2,947 traded stocks on the NSE ended in the red, while 455 were in the green, and 64 remained unchanged. The total market capitalisation of NSE stocks fell below the $5 trillion mark to $4.90 trillion.  Meanwhile, the fear index, India VIX, which gauges the volatility in the markets, ended higher by 5.58 per cent at 17.16 points.

SMIDs fall

The Nifty Midcap 100 and Nifty Smallcap indices ended down by 2.55 per cent and 2.45 per cent, respectively. Among the space, Motilal Oswal Financial Services (down 8.47 per cent), SBI Cards and Payment Services (down 6.66 per cent), ACC (down 6.35 per cent), and Neuland Laboratories (down 5.57 per cent) were the top laggards.

 

Among the sectoral indices on the NSE, Nifty PSU Bank, Pharma, Metal, and Realty ended down by over 2 per cent each, while Financial Services, Auto, FMCG, Consumer Durables, and Oil & Gas logged losses in the range of 0.62–1.85 per cent.

 

Nifty IT index, on the other hand, defied the market trend and ended higher by 0.72 per cent, led by Mphasis (up 2.66 per cent) and Persistent Systems (up 2 per cent).

Markets correction to continue in near term

Investor sentiment, Vinod Nair, head of research, Geojit Investments, turned cautious amid escalating tensions along the Indo-Pak border. The risk of the correction continuing in the near term, Nair believes, is evident as investors adopt a wait-and-watch stance. "However, it is a good time for persistent investors to dip into it, given the resilient nature of the Indian stock market during external & geopolitical volatility," said Nair.

 

Besides renewed tensions between India and Pakistan, Palka Arora Chopra, director, Master Capital Services, said concerns over corporate earnings for the fourth quarter of FY25 led market participants to square off their positions ahead of the week’s last trading day to mitigate risks.

 

"Also, the market being in a strong uptrend over the past days pushed the key indices into overbought territory, leading to profit-booking by market participants, which also added to the pullback. Investors should keep a close watch on the upcoming earnings results and management commentary for demand trends, capex plans, and overall business outlook, which will eventually shape the market’s trajectory going forward," said Chopra.

Technical View

For Nifty50, Ajit Mishra, SVP, research, Religare Broking, said sustaining above the 23,800 level is crucial for Nifty to retain its positive bias. Failure to do so, Mishra believes, could lead to further profit-taking. "Given the prevailing environment, we maintain a cautious stance and recommend a hedged approach for existing positions," said Mishra.

 

Meanwhile, Amol Athawale, VP-technical research, Kotak Securities, believes that as long as the market is trading below 24,100, the correction wave is likely to continue.  On the downside, Athawale said, the market could slip to 23,800, and further downside may drag the index down to 23,700. "Conversely, a breach above 24,100 could change market sentiment. If the market surpasses this level, it could rally to 24,400-24,500," said Athawale.