Stock Values Plummet by Nearly 7 Trillion Rupees in Two Days due to Market Turmoil during India-Pakistan Tension
Rewritten Input
India's stock market took a hit as tension between India and Pakistan escalated, causing a dent of around 7 lakh crore rupees in investors' wealth within two days.
Last night, India successfully thwarted Pakistan's attempts to strike military sites with drones and missiles, including in Jammu and Pathankot, following a series of failed bids in northern and western regions of the country. This intensifying conflict between the two nations left the Indian market anxious, prompting investors to offload their shares.
The BSE Sensex plummeted by 880 points, or 1.10%, to 79,454.47, on a mostly subdued trading day. The NSE Nifty also suffered, dropping by 265 points, or 1.10%, to 24,008. In just two days, the Sensex had fallen by a staggering 1,292 points, or 1.60%.
As a result, the market capitalization of BSE-listed companies plunged by a substantial Rs 7,09,783.32 crore, bringing it down to Rs 4,16,40,850.46 crore (approximately USD 4.86 trillion).
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, pointed out that domestic issues continued to weigh heavily on the Indian markets, despite global indices showing strength. The escalating conflict between India and Pakistan caused investors to flee the local equities, he added.
Notable laggards in the Sensex included ICICI Bank, Power Grid, UltraTech Cement, Bajaj Finance, HDFC Bank, Reliance Industries, Bajaj Finserv, Adani Ports, ITC, and Mahindra & Mahindra. Titan Company, Tata Motors, Larsen & Toubro, and State Bank of India were the gainers amid the chaos.
The BSE smallcap gauge dipped 0.30%, with the midcap index also seeing a 0.10% decrease. Among sectoral indices, realty recorded a steep 2.08% drop, while utilities, financial services, power, bankex, FMCG, and services all saw declines. Capital goods, industrials, consumer durables, and metal were the few sectors that managed to eke out gains.
Vinod Nair, Head of Research at Geojit Investments Ltd, remarked that, while a conflict had been anticipated, the intensity of the situation had raised concerns about its duration. Nevertheless, it is believed to be a brief confrontation, given Pakistan's strategic disadvantage and weak economic standing.
Foreign Institutional Investors (FIIs) continued to invest in the Indian market until May 9, 2025, while retail investors remained slightly cautious amid the escalating tensions. A total of 2,522 stocks declined, while 1,343 advanced and 145 remained unchanged on the BSE on May 10, 2025.
While the India VIX (Volatility Index) soared over 10% on May 8, 2025, the resilience of the Indian market and ongoing support from foreign investors have helped prevent a more severe downturn. The potential weakening of the US and Chinese economies, combined with a weak dollar, may have positively impacted the Indian market under normal circumstances, but the escalating geopolitical tensions overshadowed these factors. Profit-taking also played a role in the late sell-off on May 8, 2025, contributing to the significant erosion of investors' wealth.
- The BSE-listed companies experienced a substantial decrease in market capitalization due to investors fleeing the local equities, with Mahindra & Mahindra being one of the notable laggards in the BSE Sensex.
- The BSE smallcap gauge and midcap index witnessed declines as well, while some sectors like realty, utilities, financial services, power, bankex, FMCG, and services recorded drops.
- Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, stated that domestic issues, including the escalating conflict between India and Pakistan, had a heavy impact on the Indian markets.
- Vinod Nair, Head of Research at Geojit Investments Ltd, commented that the escalation of the situation raised concerns about the duration of the conflict but believed it to be a brief confrontation.
- Despite the sell-off on May 8, 2025, the resilience of the Indian market and ongoing support from foreign investors helped prevent a more severe downturn. However, the potential weakening of the US and Chinese economies, combined with a weak dollar, were overshadowed by the heightened geopolitical tensions.
