Despite maintaining its stability amidst the Indo-Pak conflict news, the Indian stock market experienced substantial selling pressure in the final two sessions of the previous week. The key indices of Dalal Street experienced noticeable selling pressure on Friday following the market’s closure on Thursday. Witnessing its most significant intraday drop since April 7, the BSE Sensex plummeted 880 points, which equated to a 1.10% decrease, leading it to finish at 79,454. In the meanwhile, registering a fall of 265 points, or 1.1%, Nifty 50 wrapped up just above 24,000 at 24,008.
The overall performance during the week wasn’t promising either as both these indices experienced a loss of more than 1.30%, thereby breaking their winning streak that lasted four weeks. In contrast, the mid-cap index showed remarkable resilience. A deeper cut at the start of the session was soon replaced by substantial recovery in the subsequent trading hours. The Nifty Midcap 100 index managed to cut down its losses, bouncing back 1,130 points which led to a minimal drop of only 0.01%, closing at 53,223.
Its peer, the Nifty Smallcap 100 index, noted a recovery of 320 points from its lowest point of the day but still closed with a slight drop of 0.61% at 16,085 points. This performance was still more robust compared to the benchmark indices. Amidst individual shares, 39 out of 50 Nifty constituents concluded their session in negative territory, meanwhile, 11 others, led by specific Tata Group shares including Titan Company and Tata Motors, sailed green despite a weak market.
The Indian market’s decline in the final two sessions of last week can be attributed to several significant factors: escalating conflicts between India and Pakistan, unfavorable global indicators, ascending rates of the US dollar, value buying seen in crude oil, and the absence of a tangible outcome from the India-US trade agreement discussions. The recent boost in the Indo-Pak conflict, following drone attacks initiated by India in Pakistan, has stirred the possibility of a full-fledged war.
Before these incidents, market expectations were centered around a surgical-strike-like response from India, but it now appears the tension could linger for a longer duration than initially foreseen. The escalating scenario between India and Pakistan in the year 2025, punctuated by the Pahalgam terrorist attack and Operation Sindoor, has introduced fresh turbulence into the Indian stock market.
Nonetheless, historic patterns hint at Indian equities’ robustness amidst such geopolitical discord, specifically the performance of Nifty 50, with corrections commonly in the range of 5–10% followed by quick recoveries. The India-US trade deal discussions haven’t shown any definite signs of progress, despite breakthrough claims from both parties. Therefore, tariff uncertainty continues.
After a significant fall in global crude oil prices, falling from around $75 per barrel to approximately $60, some value buying is being noticed in crude oil. This shift is triggering investors to square off their positions in the Indian stock market. Initially, post the 90-day halt in Trump’s tariffs, the US dollar index underwent a plummet, dropping down to around the 98-mark. However, recently, the greenback has regained favor, with the US dollar index crossing the crucial 100 mark. This fluctuation is another key reason for the selling pressure on Dalal Street.
Elsewhere in Asia, mixed signals are observed as the indices of Shanghai and Heng Seng have been showing red since morning, potentially contributing to Dalal Street investors offloading their positions. The market trajectory will be largely influenced by the unfolding geopolitical circumstances. The sharp upturn from April’s lows of 21700 has now lost its steam as the index drifts towards key moving averages such as the 20DEMA and 200DSMA.
Despite these developments, the resilience of the market is evident as the corrective phase has been relatively contained considering the scale of geopolitical threats. The past breakout mark, approximately around 23800, now emerges as a paramount support level. A breach of this level could spur further downfall with the next significant support zone projected between 23600 and 23500. This range also conforms with the 50DEMA, 89DEMA, and the 38.2% Fibonacci retracement of the recent surge.
On the other hand, immediate resistance is anticipated between 24250 and 24200. A broader recovery process may only initiate once Nifty manages to surpass convincingly the firm hurdle at 24600, notable for being the 61.8% retracement of the fall from the record highs. Owing to the enduring uncertainty, the market’s volatility is predicted to remain high.
In correlation to the rising tension between India and Pakistan, early Saturday witnessed loud explosions in several areas of Jammu and Kashmir. A notable upturn in preventative measures has been observed, with 32 airports ceasing civilian flight operations and a complete blackout imposed in Jalandhar in Punjab and various districts of Jammu & Kashmir. These escalations continue to heighten the Indo-Pak tension.