Indian stock markets tumbled significantly on Friday, 9 May 2025. This marked the second day of losses. The sharp sell-off was mainly due to rising geopolitical tensions between India and Pakistan.
Reports indicated Pakistan launched missiles towards Indian cities. These were intercepted by Indian air defence. This followed India's 'Operation Sindoor', which targeted terror camps. This sudden increase in cross-border hostilities created widespread uncertainty. Investors reacted with extreme caution.
Consequently, the main indices, the BSE Sensex and NSE Nifty 50, both closed with losses over 1%.
The market's strong negative reaction shows its sensitivity to such geopolitical shocks. This is especially true for conflicts with neighbouring nations with a history of tension.
Such events often reflect deep fears about economic disruption and wider instability. Friday's developments acted as a major trigger for a more substantial decline, building on existing anxieties.
Indian Market Snapshot: The Key Numbers
The BSE Sensex finished the day at 79,454.47. This was a fall of 880.34 points, or 1.10%. During trading, the Sensex plunged over 1,000 points. It hit an intraday low of 78,968.34.
The NSE Nifty 50 settled at 24,008.00. This was a drop of 265.80 points, also 1.10%. The Nifty's intraday low was 23,935.75, and its high was 24,164.25.
Earlier signs from the GIFT Nifty, trading around 23,972, had already pointed to a large gap-down opening for Indian markets. The Nifty closed just above the key 24,000 mark, despite falling below it during the day. This hints at some buying interest or support at lower levels.
This suggests that while negative feelings were strong, a complete collapse was avoided. The Sensex's intraday fall of over 1,000 points before a slight recovery shows the severity of panic during the session.
Why Did the Markets Tumble? The Geopolitical Shadow
The main reason for Friday's market fall was the sharp rise in India-Pakistan tensions.
Reports of Pakistan firing missiles towards Indian cities, even though intercepted, caused significant fear. India's earlier 'Operation Sindoor' strikes also contributed to worries of a wider conflict.
This heightened uncertainty led traders to adopt a 'risk-off' approach, reducing their stock holdings.
The India VIX, the market's fear gauge, clearly showed this nervousness. It surged over 8% during the day, hitting a high of 22.7. This was its highest level since 8 April and it closed with a notable rise.
A VIX reading above 20-22 usually signals increased investor anxiety and potential for bigger market swings.
Government directives for blackouts and air raid sirens in some cities likely increased public and investor fear, leading to immediate selling.
Some experts predict a short conflict, citing India's advantages and Pakistan's economic issues. However, the market's immediate reaction was driven by fear of the unknown and potential escalation.
Sectoral Action: Defence and PSU Banks Shine, Realty Bleeds
In a largely negative market, the Nifty PSU Bank (+1.95%) and Nifty Media (+0.92%) indices were the only sectoral gainers.
Defence-related stocks performed very well. Anticipation of increased government spending on defence, due to heightened tensions, fuelled a rally in these shares. To know about detail why defence sector stocks rallied, click here.
Bharat Electronics was a top Nifty gainer. Other defence companies like IdeaForge, Zen Technologies, Hindustan Aeronautics, and Bharat Dynamics also saw their stock prices rise.
Conversely, the Nifty Realty index suffered the most, falling -2.38%.
Significant losses also occurred in Nifty Bank (-1.42%), Nifty Financial Services (down over 1%), and Nifty Oil & Gas (-0.78%).
The large fall in the realty sector might reflect fears that prolonged conflict could reduce property demand or delay projects.
Other major sectors like Auto, IT, Energy, Pharma, and FMCG also closed with losses.
The Nifty PSU Bank index outperformed the broader Nifty Bank index (which includes private banks). This could suggest a move towards perceived safety within banking, with investors favouring state-backed banks during the crisis.
Stock Market Highlights: Nifty's Top Movers
Despite widespread selling, some stocks bucked the trend, often due to strong company news.
Top Nifty 50 gainers included Titan Company, which rose by about 4.18% to close around ₹3,510.30 - ₹3,510.80. This was driven by strong Q4 earnings and a positive demand outlook.
- L&T gained around 3.79%, closing near ₹3,445.70 - ₹3,450.00, following a strong Q4 profit after tax jump.
- Tata Motors increased by 3.90% to ₹708.50, helped by a positive electric vehicle outlook and strong sales.
- Bharat Electronics rose approximately 2.93% to ₹315.20 - ₹316.20, due to expectations of increased defence spending.
- SBI gained about 1.43%, closing near ₹779.40 - ₹780.00, supported by bullish technicals, the PSU bank rally, and news of a Yes Bank stake sale.
The strong performance of Titan and L&T, thanks to good quarterly earnings, shows that solid company fundamentals can sometimes help stocks resist negative market sentiment.
Among the top Nifty 50 losers was ICICI Bank, which fell by about 3.24% to ₹1,388.70 - ₹1,389.00. This was attributed to heavy institutional selling and weakness in the banking sector.
- Power Grid declined by around 2.74% to ₹299.30 - ₹299.80, possibly due to lower than expected Q4 earnings.
- UltraTech Cement dropped by about 2.22% to ₹11,379.05 - ₹11,362.00, facing weaker volume growth and input cost concerns.
- Bajaj Finance fell by approximately 1.98% to ₹8,640.20 - ₹8,662.00, affected by the broader market sell-off and profit booking.
- HDFC Bank slipped around 1.93% to ₹1,889.20 - ₹1,893.30, dragged down by overall market sentiment and banking sector weakness.
The fall in major banking stocks like ICICI Bank and HDFC Bank heavily impacted the main indices due to their large weightage. This was seen in the Nifty Bank index's 1.42% drop.
Broader Market View & Investor Activity: Caution Prevails
The market decline was widespread. The BSE Midcap index lost 0.10% and the BSE Smallcap index fell 0.30%.
While these seemed to outperform the main indices, other reports noted deeper intraday cuts of up to 2% in these segments.
The Nifty Midcap 100 ended with a slight negative bias. The Nifty Smallcap 100 fell 0.61%.
Market breadth, indicating the number of advancing versus declining stocks, was overwhelmingly negative.
On the NSE, only 445 stocks advanced, while 2,240 declined, and 67 remained unchanged. This shows widespread selling pressure. Further highlighting bearish sentiment, only 10 stocks hit a 52-week high, while 107 touched a new 52-week low.
Foreign Institutional Investors (FIIs) had been net buyers on Thursday, 8 May, investing ₹2,008 crore (NSDL data showed ₹2914.42 crore net investment in equity on 8 May).
However, Friday's rising tensions led to a more cautious outlook. Experts suggested FIIs might adopt a "wait-and-watch" approach, possibly reducing their holdings.
Retail investors were also reported to be cautious. The total market capitalisation of BSE-listed firms fell by nearly ₹2 lakh crore in this single session. Adding to caution, equity mutual fund inflows dipped for the fourth straight month in April. They fell to ₹24,269 crore, a one-year low.
Expert Corner: What Do The Analysts Say?
Market analysts offered different views on the day's sharp fall and the future outlook.
- Vinod Nair of Geojit Investments said that while a conflict was expected, the market hadn't anticipated this level of intensity. He still projected a short-lived confrontation, citing India's advantages and Pakistan's economic situation.
- Rupak De from LKP Securities noted Nifty traders were using "risk-off" strategies. He observed the Nifty found support near its 21-day Exponential Moving Average (EMA), closing above 24,000. He warned that bears might try to push the index below 24,000. A break below 23,900 could increase bearish bets. He identified 24,250 as an immediate resistance level.
- Dr. V.K. Vijayakumar of Geojit Financial Services advised against panic selling. He suggested staying invested and monitoring developments. He believed the market might not see deep cuts due to India's military superiority and strong economic fundamentals.
- Conversely, Aditya Gaggar of Progressive Shares recommended a cautious "wait and watch" approach. He pointed to high geopolitical risks that could cause sharp volatility. He placed Nifty's support at 24,000 and resistance near 24,250.
- Bajaj Broking noted FIIs usually react cautiously to geopolitical instability. However, they believed India's strong macroeconomic fundamentals could prevent significant capital flight.
This mix of opinions presents a complex picture for investors. Some stress caution due to technical issues and geopolitical risks. Others highlight underlying economic strength.
The common advice to monitor developments and avoid panic emphasises individual risk assessment in such times.
Other Market News & Global Cues
The Indian Rupee showed surprising strength. This recovery broke a three-day losing streak. Some attributed it to intervention by the Reserve Bank of India (RBI).
This strength occurred despite geopolitical tensions that usually weaken the currency, and a generally firm US dollar globally.
- In commodities, crude oil prices rose slightly.
- Gold prices were mixed. International gold prices had fallen over the previous two days due to better US-UK trade sentiment and a stronger dollar. However, local prices saw a small increase, possibly due to some safe-haven buying.
- A major non-market event was the suspension of the Indian Premier League (IPL) 2025 season. This was due to the heightened India-Pakistan tensions and has economic effects for many businesses.
- In company news, Yes Bank shares jumped over 8%. This followed reports of board meetings to finalise a stake sale to Japan's Sumitomo Mitsui Banking Corporation (SMBC), with SBI also selling stake.
- Bharat Forge shares rose 5.5%, helped by the geopolitical situation, despite weak Q4 earnings.
- Several companies, including Titan, CERA Sanitaryware, Kalyan Jewellers, and Union Bank, reported strong quarterly results, leading to gains in their share prices.
- Global markets showed a different trend. While Indian markets fell, European markets gained. Germany's DAX index reached a record high, helped by easing tariff tensions.
- US markets had closed higher on Thursday. Futures pointed to a steady opening on Friday, with markets watching US-China trade talks. At the close on 9 May, major US indices like the Dow Jones, S&P 500, and Nasdaq all finished positively.
This difference highlights that the sharp fall in Indian markets was mainly due to local and regional geopolitical factors, not a global downturn.
Looking Ahead: Navigating Choppy Waters
Investors should remain cautious and closely watch geopolitical developments, especially over the weekend. These will heavily influence market sentiment next week.
Any negative news during market closure could lead to volatile openings. Key technical levels for the Nifty 50 are support around the 23,900-24,000 zone and resistance near 24,250. These will be crucial to watch.
While immediate sentiment is weak, some analysts believe in the Indian economy's fundamental strength to handle such short-term shocks.
The market's near-term direction will largely depend on whether the geopolitical situation improves or worsens.