Markets a casualty in India-Pak geopolitical flare up; Sensex dips 412 pts

Stock market closing bell, Thursday, May 8, 2025: Indian equity markets ended lower on Thursday as investors at Dalal Street remained cautious amidst flaring up of geopolitical tension between India and Pakistan. The BSE Sensex tanked 411.97 points, or 0.51 per cent towards the fag end of the trading session after trading rangebound for most part of the day.   

The Nifty50, on the other hand, ended down by 140.60 points or 0.58 per cent at 24,273.80 levels.

 

The fall was triggered by news reports that India had neutralised an air defence system in Lahore in a measured military response to Pakistan’s attempted drone and missile attacks on multiple Indian military installations the previous night. READ ABOUT IT HERE

 

 

The selloff extended to the broader basket as well, with midcap shares being the worst hit. The impacts were more pronounced in the sectoral front, with metals, realty, auto, pharma, healthcare, and banks bearing the brunt.

 

At close, the BSE Sensex was at 80,334.81, down 411.97 points or 0.51 per cent, with 26 out of 30 constituent stocks ending in the red. Eternal (formerly Zomato), Mahindra & Mahindra (M&M), Bajaj Finance, Maruti Suzuki India, and Tata Steel were among the top laggards, which ended in a range of -3.97 per cent to -1.98 per cent.

 

Axis Bank (-0.70 per cent), HCL Tech (-0.67 per cent), Kotak Mahindra Bank (-0.33 per cent), and Titan (-0.05 per cent) were the only 4 Sensex constituent stocks that managed to eke out gains on Thursday.

 

The index heavyweights HDFC Bank, and Bharti Airtel ended lower by over 1 per cent each.

 

The market breadth remained negative as 2,552 out of 4,032 traded stocks on the BSE ended in the red, while 1,345 ended higher, and 135 remained unchanged. Meanwhile, the volatility in the markets was high as the fear index (India VIX), a gauge of volatility, ended higher by 10.21 per cent at 21.01 points. 

SMIDs fall; Realty, metal top laggards among sectors

 

Among the broader markets, Nifty Midcap100 index ended lower by 1.95 per cent, dragged by UPL (down 6.10 per cent), Torrent Power (5.59 per cent), and Jubilant Foodworks(5.47 per cent). 

 

The Nifty Smallcap100 index also ended lower by 1.43 per cent dragged by Devyani International (6.58 per cent), Inox Wind (4.93 per cent), and Laurus Labs (4.54 per cent).  

Among the sectoral indices on the NSE barring Nifty IT (up 0.23 per cent), and Media (up 0.20 per cent), others settled in red with Nifty Realty (2.47 per cent), and Nifty Metal (2.09 per cnet) being the top laggards. Among others Nifty Auto, PSU Bank, healthcare, conumer duarbles, and FMCG each ended lwoer by over one per cnet. 

Investor caution amid geopolitical tensions, market volatility

Analysis suggests that investors are cautious amidst the current geopolitical conflict and expect volatility to neutralize as cross-border issues de-escalate, as global market sentiments remain favorable.

 

There is a lot of caution in the markets as investors, Prashanth Tapse, senior VP (Research), Mehta Equities, said, are worried that the ongoing tension resulting in a major conflict between the two nuclear-powered nations could spark a major sell-off in equities. Hence, profit-taking was seen in almost all sectors, barring select IT counters. "With the local currency depreciating sharply amid the ongoing stand-off, foreign investors could flee domestic equities to park their funds in overseas safe-haven assets,” said Tapse.

 

Echoing similar views, Vinod Nair, head of research, Geojit Investments, said, "The markets experienced profit booking due to escalating tensions between India and Pakistan, marked by increased cross-border exchanges. The FOMC policy meeting, Nair believes, provided little reassurance, as the US Fed expressed concerns that aggressive US tariffs could fuel inflation and raise unemployment."

 

"However, the global market remains stable and positive, buoyed by expectations of an imminent US trade deal with the UK and preliminary indications of trade talks with China. Historically, domestic volatility is expected to neutralize as cross-border issues de-escalate," said Nair. 

Technical charts reflect weakness for Nifty50

 

Technically, Nifty50 formed a red candle on the daily chart, reflecting weakness. The index, Hrishikesh Yedve, AVP of technical and derivatives research at Asit C. Mehta Investment Intermediates, said, continues to struggle near the crucial resistance zone of 24,590. As long as the index remains below this level, the short-term upside appears capped.

 

"However, a sustained move above 24,590 could trigger an extended rally towards the 24,800–24,850 levels. On the downside, key support is seen around the 200-Day Simple Moving Average, placed near 24,050," said Yedve.

 

Meanwhile, analysts at Bajaj Broking Research believe that a follow-through weakness below Thursday's low (24,150) can lead to an extension of the decline for Nifty50 towards the 24,000 levels. They expect Nifty50 to continue its consolidation within the 24,000–24,600 zone — a range it has held over the past eight sessions. "Strong support lies between 24,000 and 23,800. Only a sustained close above the resistance zone of 24,550–24,600 could pave the way for an upward move towards the December 2024 high of 24,850 in the near term," said the analysts.