The small and midcap stocks were hammered in Thursday’s session as tensions between India and Pakistan escalated after India conducted Operation Sindoor to avenge the deadly terror attack in Pahalgam of the union territory of Jammu & Kashmir.
BSE Midcap tanked 815.68 points or 1.9% to close the session at the 42,154.47 level. The BSE Smallcap index fell 500 points or 1.05% to finish at 46,882.73. The fall in the stock prices came during the last hours of the trading.
As the risk is higher in small and mid-cap stocks, they saw relatively higher cuts than the benchmark indices. Markets are shifting towards the benchmark indices, said Sunil Jain, Vice President and Head of Derivatives, at Elara Capital.
The key reasons behind the sharp fall-
Defence Ministry’s confirmation
In a high-level meeting on Thursday, the Defence Ministry confirmed that ‘Air Defence system at Lahore has been neutralised and multiple other locations have been targeted’.
US Consulate advisory
The US Consulate General in Lahore directed all its personnel to shelter-in-place due to reports of drone explosions, downed drones, and possible airspace incursions in and near Lahore. The Consulate has received initial reports that officials might be moving people out of certain areas near the main airport in Lahore. US citizens who find themselves in an area of active conflict were asked to leave if they could do so safely. If they’re not able to leave safely, they should shelter in place.
“The Indian equity market experienced profit booking by the end of the trading day due to escalating tensions between India and Pakistan, marked by increased cross-border exchanges. The FOMC policy meeting provided little reassurance, as the FED expressed concerns that aggressive U.S. tariffs could fuel inflation and raise unemployment,” said Vinod Nair, Head of Research at Geojit Investments.