Gift Nifty Today: BSE Sensex, Nifty 50, Rupee Set To Open Lower As India-Pakistan Conflict Rises

Indian financial markets are expected to open lower on Friday following reports of serious tensions escalating between India and Pakistan. 

The Indian Rupee is likely to weaken further after the country's defence ministry confirmed that military installations were targeted by drones and missiles originating from Pakistan.

This heightened geopolitical risk has triggered a wave of market uncertainty.

Markets React to Geopolitical Tensions

On Thursday, India's benchmark index, the Sensex, experienced a volatile session, closing lower by nearly 412 points, or 0.51%, at 80,334.81. The decline was driven by heavy selling in sectors such as banking, FMCG, and auto, amid growing concerns over the situation along the India-Pakistan border. Despite a brief rally in the morning, the market failed to hold onto its gains, reflecting the geopolitical situation.

Sectoral indices were all in the red, with realty, oil & gas, auto, power, and utilities stocks seeing significant losses. On the flip side, IT stocks were the only gainers, benefiting from their defensive nature in turbulent times.

Also Read: World Bank President Ajay Banga Meets PM Narendra Modi Amid Indo-Pak Con

GIFT Nifty Shows Mixed Signals

The GIFT Nifty futures, which provide an early indication of the Nifty 50's performance, went down by 250 points initially. However, it regained some ground, trading at 23,959 as of 7:46 AM, suggesting a modest opening of about 0.31% higher compared to Thursday's close of 24,273.8.

“With further escalation reported overnight, the market may remain highly volatile today as well," said Sudeep Shah, SBI Securities.  

“The volatility index, India VIX, surged by over 10% on Thursday. From the recent low of 12.84, it has surged by 104% in just 11 trading sessions. This indicates that the overall market volatility has increased significantly due to the geopolitical tension between India and Pakistan. Going ahead, the zone of 22.60-22.80 will act as an immediate hurdle for the index. While 19.50-19.30 will act as crucial support," he added. 

Rupee Faces Pressure Amid Rising Tensions

The Indian Rupee saw its sharpest single-day fall in over two years, losing 81 paise to settle at 85.58 against the US dollar on Thursday. The sharp depreciation of the currency was largely attributed to the escalating tensions between India and Pakistan, which prompted investors to take a more cautious approach.

On Wednesday, the rupee had already dropped by 42 paise to close at 84.77, following India’s military strikes against terrorist camps in Pakistan and Pakistan-Occupied Kashmir. The recent attacks, carried out using drones and missiles, have added to the risk aversion in the market, pushing the rupee to its steepest fall since September 2022.

Foreign Institutional Investors (FIIs) have continued to buy equities, with net purchases worth Rs 2,585.86 crore on Wednesday, but the overall market sentiment remains cautious.

Pakistan-Origin Drone and Missile Attacks

Late Thursday, explosions rocked the Indian city of Jammu as part of a Pakistani military offensive aimed at Indian military installations. The attacks, carried out by drones and missiles, targeted various sites in northern and western India, including Jammu, Srinagar, Pathankot, and Amritsar. However, Indian defence systems successfully intercepted and neutralised the incoming threats, including destroying a Pakistani air defence system in Lahore.

Despite the immediate success in countering the attacks, the incident has added to the mounting tension between the two nuclear-armed neighbours, further rattling investor sentiment.