Second day of selloff as India-Pak tensions escalate, Nifty down a percent near 24,000

Markets in red for second straight session as India-Pak tensions intensify; sectorally, capital goods and PSU Banks in green

The overnight escalation in hostilities by Pakistan along India’s western border has soured equity market sentiment on May 9, with the benchmark indices in the red for a second day in a row, down a percent, along with similar cuts in the mid and smallcap indices, fearing uncertainty.

During afternoon trade, the mid and smallcap indices saw cuts of up to a percent, with the fear gauge, India VIX, higher by 3 percent as of 1:00 pm.

Sectorally, capital goods and PSU Banks led the gains, higher by about 2%, followed by consumer durables index posting gains of one percent, while the auto index is trading lower by 0.50 percent.

Read More: Samir Arora says war risk a 1% tail event, can’t position for that, India theme strong

Top losers on BSE Sensex at around noon were led by financials, with ICICI Bank, HDFC Bank and Bajaj Finserve down 1.5-2.6 percent. Top gainers were Titan, L&T, and Tata Motors, rising between 3-4 percent.

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Other top gainers on Nifty 50 index were Hero Motocorp, ONGC and JSW Steel, while key Nifty 50 losers include Ultratech Cement, Apollo Hospital and Shriram Finance, down by about 2 percent.

Defence stocks opened higher on Friday, after another day of escalating tensions along the India-Pakistan Border.

Since the Pahalgam terror attack on April 22, the Sensex has lost merely by 0.046% while the Nifty has lost by 0.56%.

Heightened border tensions and weak global cues are both weighing on markets and the rupee, and money managers are advicing investors to stay cautious. Analysts have recommended to avoid aggressive positions and focus on fundamentally strong stocks with limited near-term exposure to geopolitical risks.

Market experts believe that short-term volatility is likely to persist for some more time, but as the border situation de-escalates, sentiment should revive.

Shrikant Chouhan, Head – Equity Research, Kotak Securities said the equity markets will also track developments around various trade negotiations with the US, which are in the works. "Trump said, the US would need an “enormous” amount of time for deals with Japan and South Korea, he also added that “a lot of work” would be needed for an India pact, which is proves that Indian are really tough in terms of negotiating on deals," said Shrikant Chouhan.

He added that if the market breaks below 24,200, we may see more weakness through the day, potentially leading to a re-test of 23900 or 23850 levels that were tested nine days ago. For a bullish sentiment, it is essential to maintain levels above 23,800 on a closing basis, otherwise, the likelihood of a drop to 23,500 increases significantly.