India-Pakistan war buzz: Sensex tanks 880 points, Nifty 50 near 24K; why is Indian stock market falling? 5 key reasons

Mint

10-05-2025

Stock market today: Despite showcasing resilience against the India-Pakistan war buzz, the Indian stock market witnessed sell-off pressure on the last two sessions last week. After going off on Thursday, key benchmark indices of Dalal Street came under sharp selling pressure on Friday.
On Friday, the BSE Sensex tumbled 880 points, or 1.10%, marking its steepest intraday fall since April 7, to settle at 79,454. Meanwhile, the Nifty 50 crashed 265 points, or 1.1%, to close slightly above the 24,000 mark at 24,008. For the week, both indices lost over 1.30%, snapping their four-week winning streak.
The mid-cap index however, stood resilient. Although it started the session with deeper cut, it swiftly recovered in the following hours of trading.
The Nifty Midcap 100 index rebounded 1,130 points to settle with just a 0.01% drop at 53,223, while its peer, the Nifty Smallcap 100 index, recovered 320 points from the day's low but concluded the session with a 0.61% drop at 16,085 points, still outperforming the benchmark indices.
In terms of individual stocks, 39 constituents of the Nifty 50 ended the session in the red, while the remaining 11—led by Tata Group stocks including Titan Company and Tata Motors—finished the session in the green despite weak market conditions.
According to stock market experts, this fall in the Indian stock market for the last two straight sessions can be attributed to five major reasons: the Indian-Pakistan conflict rising beyond an expected limit, weak global cues, rise in the US dollar rates, value buying in the crude oil prices and no concrete outcome from India-US trade deal talks.
Speaking on the reasons for the Indian stock market fall on Friday, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, 'It's true that the Indian stock market is falling, but we can't call it a crash as the Nifty 50 index is still above 24,000 levels. However, it's for sure that the market has become highly volatile after India's drone strikes in Pakistan. The India-Pakistan conflict has gone beyond the market estimates, and hence, investors are not in the mood to take any risk when the US Dollar Index has regained the crucial 100 levels. Crude oil prices have also surged, and major Asian indices like Shanghai and Hang Seng are under pressure.'
Asked about the top five reasons that are dragging Indian stock market today, Gorakshkar said, 'There are the top 5 reasons that are dragging Dalal Street indices: Escalation in India-Pakistan conflict after drone strikes in Pakistan, weak global cues, rebound in US dollar rates, bottom fishing in crude oil, and not any concrete outcome from the India-US trade deal talks.'
1] India-Pakistan war buzz: 'The escalation in the India-Pakistan conflict after India's drone strikes in Pakistan has raised fears of an India-Pakistan war. Earlier, the market was expecting a surgical strike-like retaliation from the Indian government, but the tension seems more prolonged than expected earlier,' said Avinash Gorakshkar.
On how much correction in the Indian stock market can be expected in the backdrop of India-Pakistan war buzz, Seema Srivastava, Senior Research Analyst at SMC Global Securities, said, 'The escalating tensions between India and Pakistan in 2025, marked by events such as the Pahalgam terror attack and India's Operation Sindoor, have introduced fresh volatility into the Indian stock market. However, historical trends suggest that Indian equities, particularly the Nifty 50, have demonstrated resilience during past geopolitical conflicts, with corrections typically limited to 5–10% and recoveries often swift.'
2] No concrete outcome from the India-US trade talks: 'Despite soon coming breakthrough claims from both sides, there is no such concrete evidence of a fruitful outcome from the India-US trade deal talks. So, the tariff uncertainty is still persisting, and hence, investors are not in the mood to keep their money in risky assets like equity,' said Gorakshkar.
3] Value buying in crude oil price: 'After the fall in the crude oil prices from around $75 per barrel to around $60 per barrel in the international market, some value buying is taking place in the black gold. This is also a reason for investors squaring off their positions in the Indian equity market,' said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.
4] Rise in US dollar rates: 'After the 90-day pause in Trump's tariffs, the US dollar index witnessed a sharp decline and came around 98 levels. However, the American currency has once again become bulls' favourite and the US dollar index has regained the crucial 100 levels, which is also a major trigger for selling pressure on Dalal Street,' said Anshul Jain.
5] Weak global market cues: Avinash Gorakshkar of Profitmart Securities said that Asian markets are also mixed as Shanghai and Heng Seng indices are trading red since morning. This could also be a reason for Dalal Street investors squaring off their positions.
Stock market outlook amid India-Pakistan war buzz
Asked about the outlook of the Indian stock market amid rising geopolitical tension, Rajesh Bhosale, Equity Technical Analyst, Angel One, said, 'Going ahead, market direction will remain highly sensitive to developments on this geopolitical front. The sharp rally from the April lows of 21700 has now lost momentum, with the index slipping towards the key moving averages like the 20DEMA and the 200DSMA. Despite this, the market has shown some resilience, as the correction has been relatively contained given the magnitude of the geopolitical risks. The previous breakout level around 23800 now becomes a key support. A breach of this level could trigger further downside, with the next major support zone seen between 23600 and 23500, a confluence of the 50DEMA, 89DEMA, and the 38.2% Fibonacci retracement of the recent upmove. On the upside, immediate resistance lies between 24250 and 24300. A broader recovery may only unfold once Nifty decisively surpasses the stiff hurdle at 24600, which marks the 61.8% retracement of the fall from all-time highs. Given the ongoing uncertainty, volatility is expected to remain elevated. Hence, traders are advised to focus on intraday opportunities and avoid aggressive overnight positions.'
Loud explosions were heard in parts of Jammu and Kashmir early Saturday, 32 airports have been shut for civilian flight operations, and a complete blackout has been imposed in Punjab's Jalandhar and in several districts of Jammu & Kashmir as tension between India and Pakistan continue to escalate.
Meanwhile, the International Monetary Fund (IMF) approved the first review of Pakistan's economic reform program under the Extended Fund Facility (EFF), enabling a disbursement of approximately US $1 billion. India, however, firmly opposed providing funds to a country that continues to sponsor cross-border terrorism.
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