The BSE building in Mumbai.
Credit: PTI File Photo
Bengaluru: Benchmark indices BSE Sensex and NSE Nifty dropped 1.10% each on Friday, as investors got the jitters due to the ongoing tensions between nuclear-armed neighbours India and Pakistan, fuelling fears of a wider conflict.
Extending its previous day's decline, the 30-share Sensex fell 880.34 points to settle at 79,454.47, in a largely range-bound trading. Investors on the Sensex have lost Rs 7.1 lakh crore in the last two trading sessions. The NSE Nifty dropped 265.80 points to 24,008.
The India Volatility Index (VIX, also known as Fear Index) rose nearly 3% on Friday, indicating that investors are becoming increasingly nervous about an escalation of hostilities. India’s economy and equity markets dwarf that of Pakistan, and a rise in tensions will impact inflows of foreign investment.
"A conflict was anticipated but the market was not expecting the situation to intensify, raising concerns about its duration. However, it is still projected to be a short-lived confrontation, given the strategic advantage and the opponent’s weak economic standing. Interestingly, Foreign Institutional Investors (FIIs) continued to invest in the Indian market until yesterday, while retail investors remain slightly cautious at the moment," said Vinod Nair, Head of Research, Geojit Investments Limited.
From the Sensex firms, ICICI Bank, Power Grid, UltraTech Cement, Bajaj Finance, HDFC Bank, Reliance Industries, Bajaj Finserv, Adani Ports, Mahindra & Mahindra and NTPC were among the laggards. In contrast, Tata Motors, State Bank of India and Asian Paints were among the gainers.
The BSE smallcap gauge declined 0.30%, and the midcap index dipped 0.10% on Friday. On the weekly front, the BSE benchmark dropped 1,047.52 points or 1.30%, and the Nifty declined 338.7 points or 1.39%.
“Looking ahead, elevated geopolitical risks have significantly heightened market volatility, as reflected in the surge of the India VIX. Investors are advised to adopt a stock-specific approach and refrain from taking aggressive positions until there is more clarity,” said Ajit Mishra, SVP Research, Religare Broking Ltd.
“A hedged strategy is recommended to manage near-term risks, while close monitoring of geopolitical developments will be crucial in shaping the market's next move," Mishra said.
In Asian markets, South Korea's Kospi and Shanghai's SSE Composite index settled lower, while Japan's Nikkei 225 index and Hong Kong's Hang Seng ended in the green. European markets were trading higher.