Sensex today tanks over 400 points in fag-end selling as India-Pakistan tensions flareup; Nifty below 24,300

Stock market today: Indian frontline indices ended Thursday’s trading session (May 8) in the red, as escalating tensions between India and Pakistan weighed on investor sentiment. The Indian stock market opened on a positive note but witnessed a sharp sell-off during the final hour of trade after the Indian government confirmed that the armed forces had targeted air defence radars and systems at multiple locations in Pakistan. 

Apart from rising geopolitical tensions, hawkish comments from the US Federal Reserve on the growing risks of inflation and unemployment—also kept Indian stock market investors on edge.

While buying action was seen in selected counters as they reacted to their March quarter performance, the majority of sectors finished in the red.

The Nifty 50 concluded the trade with a drop of 0.51%, falling below the 24,300 mark to settle at 24,273, while the Sensex fell by 411 points, or 0.51%, to close at 80,334. 

The mid- and small-cap stocks, known for their higher volatility, ended with deeper cuts—Nifty Midcap 100 closed with a 2.16% drop, while its peer, the Nifty Smallcap 100 index, ended with a 1.6% decline

While the Indian stock market saw limited losses despite rising geopolitical tensions in recent trading sessions, the sell-off in Pakistan's stock market deepened further, prompting exchanges to halt trading. 

According to a Reuters report, Pakistan's benchmark KSE-100 index fell another 6% in today's session, triggering a trading halt. India-Pakistan tensions have been escalating since India targeted nine terrorist base camps in Pakistan and Pakistan-occupied Kashmir (PoK) in the early hours of May 7, in what it called ‘Operation Sindoor.’

In the aftermath, Indian military officials in New Delhi said that the armed forces also foiled attempts by the Pakistani military to engage several military targets across Northern and Western India and destroyed a Pakistani air defence system in Lahore, PTI reported. 

Meanwhile, S&P Global Ratings, in its latest release, stated that heightened tensions between India and Pakistan following the outbreak of hostilities have amplified regional credit risks.

The rating agency expects intense military actions between the two countries to be temporary, resulting in limited confrontations.

However, miscalculations could significantly increase credit risks for both sovereigns, S&P warned. It added that while tensions are expected to remain high in the coming weeks with the possibility of further military actions, a likely de-escalation should help limit lasting negative effects on sovereign creditworthiness.

The US Federal Reserve on Wednesday held interest rates unchanged, but Chair Powell noted heightened risks to both inflation and unemployment. He also rejected the notion of a preemptive rate cut to offset any potential economic fallout from President Trump’s proposed tariffs.

Sectoral snapshot: Realty drags, while IT bucks the trend

Among the 13 major sectoral indices, Nifty IT managed to close in the green with a modest gain of 0.23%, followed by Nifty Media, which rose 0.20%.

Barring these two, all other indices ended in the red, with Nifty Realty emerging as the biggest laggard, tumbling 2.47%. It was followed by losses in Nifty Metal, Nifty Auto, Nifty Pharma, Nifty Oil & Gas, and Nifty FMCG, each closing with declines of over 1%.

Commenting on today's market performance, "Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said, “There is a lot of caution in the markets as investors are worried that the ongoing tension resulting in a major conflict between the two nuclear-powered nations going ahead could spark a major sell-off in equities, and hence profit-taking was seen in almost all the 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," he further added.

Markets to remain volatile in the near term, says expert

Rupak De, Senior Technical Analyst at LKP Securities, said, "The index closed with a Dark Cloud Cover candlestick pattern, indicating heightened fear among traders. Prior to this, the index faced resistance around 24,550. The near-term sentiment now appears weak, with the potential for further correction in the short term. Immediate support is seen at 23,950; a break below this level could lead the index down towards 23,450. On the upside, resistance is placed at 24,400 and 24,550.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.