The BSE Sensex sharply declined around 1,000 points on Friday, resulting in a significant loss of investor wealth of about Rs. 8 lakh crore. The Indian stock market’s increased volatility and investor fears are reflected in this fall. Analysts believe that the rising concerns over geopolitics, which became more sensitive after the terrorist attack on tourists in Kashmir, is a major contributor.
Why is The Indian Stock Market Down Today?
The strong potential for tension escalation between India and Pakistan affects investor confidence, leading to widespread profit booking and a decline in the Indian equity value. The nervousness triggered by the attacks is reflected in the decline of the BSE and Nifty50 indexes. Reports indicate that the BSE Sensex fell by approximately 949 points, or 1.19%, to around 78,852.09, and the Nifty 50 by about 323 points, or 1.33%, to approximately 23,923.45.
Downgraph in Smallcap and Midcap Companies
The downward graph extended to the midcap and the smallcap companies listed on the BSE. Per reports, the BSE Midcap and Smallcap indices bore losses of more than 3 percent during the session. BSE SmallCap Index decreased by 2.5%, or 1,233 points, to 48,034.28, and BSE MidCap Index fell by 2.36%, or 1,030 points, to 42,560.40.
Moreover, the Indian VIX, or the Volatility Index that measures “fear” in the market, surged by 6.46%. The surge indicates that investors, analysts, and the market are worried and that the odds of large swings in stock prices (either up or down) are inevitable.
Declines in Nifty
All of the major sectoral indices closed down as a result of the widespread sell-off. Nifty PSU Bank experienced a 2.87% decrease, while Nifty Media experienced a 3.54% decline, leading to the losses. Healthcare and Pharma each had more than 2.4% declines, while Nifty Realty fell 2.69%. The Nifty Metal saw a 2.42% drop, Consumer Durables 2.08%, Oil & Gas- 1.97%, Auto- 1.88%, and Financial Services, Private Bank, and FMCG indices had declines, between 1.5 and 1.6%. The Nifty IT index, which usually holds its ground during downturns, closed the day 0.45% lower.
The benchmark indices saw only a few gains, with TCS leading the field with a 0.70% increase and Infosys following closely after with a 0.67% gain. HDFC Bank had a slight increase of 0.08%, while IndusInd Bank also experienced an increase of 0.31%. ICICI Bank remained unchanged, while Axis Bank experienced the worst decline, dropping 4.28%. Adani Ports dropped down 3.38%, Bajaj Finance lost 2.61%), Bajaj Finserv slipped 2.49%, and Power Grid was down 2.40%.
Commenting on the current market trends, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said India’s response to Pakistan regarding the brutal Kashmir attacks is the biggest cliffhanger. He said the uncertainty and decisions based on speculations will only put the market on edge. He said investors must wait for clarity on the geopolitical front.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities Pvt Ltd, also advised caution. He stressed that the ongoing Indo-Pak tensions should only inspire caution among investors. He said they should consider staying in cash. Those with long-term investment plans can buy under this climate as it could be a viable strategy.
