Indian stock markets opened Friday’s trading session with a sharp downturn. Both the headline indices Sensex and Nifty slipped into the red amid rising geopolitical tension.
In less than an hour of trading, the Sensex had tumbled over 900 points while the Nifty slid more than 300 points, wiping out lakhs of crores in investor wealth.
Let’s take a look at the three key factors weighing down the markets today-
India-Pakistan tensions spark panic
Markets hate uncertainty and the sudden spike in hostilities between India and Pakistan has sent a chill through investor sentiment. This week, tension escalated dramatically after India launched ‘Operation Sindoor’ in retaliation to a deadly and horrific terror attack in Pahalgam on April 22 that killed 26 innocent people.
Two weeks after a deadly terror attack in Pahalgam, India hit back with airstrikes on May 7, targeting nine terror camps in Pakistan and Pakistan-occupied Kashmir (PoK). The operation, named Operation Sindoor, was carried out across the Line of Control (LoC) to destroy terrorist bases believed to be behind the attack.
By Thursday night, things turned more serious. Air raids and missile threats were reported in Jammu and Punjab regions. Blackouts were imposed in cities like Pathankot, Amritsar, and Chandigarh. Moreover, reports indicated of Indian military bases in Jammu, Udhampur, and Pathankot came under attempted strikes
Rs 3.5 lakh crore gone in a flash
The sheer scale of the market wipeout highlights the nervousness. In early trade, the total market capitalisation of BSE-listed companies fell Rs 3.5 lakh crore, dropping from Rs 418.51 lakh crore on Thursday to Rs 415.01 lakh crore.
Smallcap and midcap indices were also not spared either. BSE Midcap index fell around 1% and the Smallcap index dipped over 1.5%.
US distances from India-Pakistan tension
While global markets usually look to the US for direction in times of crisis. US Vice President JD Vance, in an interview with Fox News, said, “This is fundamentally not our problem.” He added that while the US would encourage peace talks, it wouldn’t intervene in a war that’s “none of our business.”
Vance also acknowledged concerns about a potential nuclear escalation but expressed hope that “cooler heads” in both countries would prevail.