Sensex, Nifty close higher despite India-Pak tensions; all eyes on US Fed meet

Top gainers included Tata Motors, Eternal, Jio Financial, Bajaj Finance, and Shriram Finance.

Indian markets ended marginally higher on May 7, even as rising geopolitical tensions and caution ahead of the US Federal Reserve’s policy decision kept investors jittery. After India launched a pre-emptive strike across the border, sentiment turned cautious, though experts said that the move was largely priced in.

Meanwhile, global investors awaited Fed Chair Jerome Powell’s remarks, especially on tariffs and inflation, which could steer risk appetite worldwide.

The Sensex settled the day at 80,746.78, up 105.71 points or 0.13 percent at 80,746.78 while the Nifty closed with a gain of 34.80 points or 0.14 percent at 24,414.40. About 2121 shares advanced, 1620 shares declined, and 149 shares remained unchanged on BSE.

“From a market point of view, I do not think this should be looked as a negative because whatever will happen was broadly priced in and market was already prepared for it,” said A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.

“Also, if you see such instances in the last few years, those were not major threat to the economy as such,” he added.

Indian armed forces launched Operation Sindoor in the early hours of Wednesday in retaliation to the Pahalgam terror attack where 26 people were killed on April 22. India carried out missile strikes on nine terror targets in Pakistan and Pakistan-Occupied Kashmir (PoK) including the Jaish-e-Mohammad headquarter of Bahawalpur and Lashkar-e-Taiba's base Muridke.

Also read: JeM chief Masood Azhar accepts 10 family members killed in Indian strike in Pakistan: Report

With the developments around Indo-Pak escalation taking centrestage, defence stocks were in the limelight though most stocks ended in negative territory.

While Mazagon Dock Shipbuilders lost 5.09%, Hindustan Aeronautics was down a marginal 0.83%. Bharat Electronics was almost flat, shedding 0.16%.

Market veteran Shankar Sharma believes that the Indian markets are already on shaky grounds and the latest escalating geopolitical tensions between India and Pakistan could add to the headwinds.

“The Indian markets were already on shaky grounds prior to this development and this will only add to the concerns. Since last September, markets have been trending downwards and so the escalation cannot be viewed as a good outcome,” said Sharma.

It will definitely impact the overall markets though certain sectors could be more vulnerable, he added.

Meanwhile, textile stocks were also high on investor radar following the Free Trade Agreement (FTA) signed between India and UK as the pact is expected to boost exports of labour and technology intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery.

Vardhman Textiles, Welspun Living, Arvind, and Raymond Lifestyles among others gained ground and closed in positive territory. While Welspun Living gained nearly 12 percent, Raymond Lifestyle was up more than six percent on Wednesday.

Read more: Watch: India shares video evidence of Operation Sindoor, shows terror camps destroyed in Pakistan, PoK

Sectoral indices on the NSE were largely in the green on May 7, with auto stocks leading the rally. The Nifty Auto index jumped 1.66 percent, supported by strength in Tata Motors. Consumer Durables and Media followed suit with gains of 1.18 percent and 1.06 percent, respectively. Metals, Energy, Realty, and Banking stocks also posted decent advances, with Nifty Metal up 0.98 percent and Nifty Bank gaining 0.63 percent. Private banks outperformed PSU peers, while the IT and Oil & Gas indices saw modest upticks. On the downside, FMCG and Pharma were the only major sectoral laggards, slipping 0.52 percent and 0.33 percent, respectively.

Among individual stocks, Tata Motors surged nearly 5 percent, buoyed by overwhelming shareholder support for its commercial vehicle demerger. The company is also seen benefiting from the India-UK trade pact, which trims auto import duties under a quota system.

Meanwhile, BSE shares rallied 8 percent after the exchange operator posted a sharp 362 percent jump in Q4 net profit to Rs 494 crore, along with a generous final dividend of Rs 23 per share and a special dividend of Rs 5.

Paytm too jumped over 8 percent after its Q4 net loss narrowed to Rs 540 crore, which included a one-off ESOP cost of Rs 522 crore. Brokerages took note of the improving financials, pushing the stock higher.

Market experts suggest some consolidation may be in store as technical indicators signal fatigue. "Only 23.8 percent of Nifty 500 stocks are trading above their 10-day moving averages, which points to a possible trend reversal. Strong support lies at 24,050–23,930," said Anand James of Geojit.

Top gainers included Tata Motors, Eternal, Jio Financial, Bajaj Finance, and Shriram Finance. On the losing side were Asian Paints, Sun Pharma, Bajaj Auto, Grasim and Reliance.

Commenting on the market’s reaction to the strikes, Geojit’s V K Vijayakumar noted that the limited and targeted nature of India’s military action suggests low risk of immediate escalation. “The market had largely priced in a retaliatory move, so barring surprises, we don’t expect lasting disruption,” he said.