Indian stocks decline with intensifying geopolitical tensions and varied global signals; midcaps and smallcaps suffer the maximum brunt
Following a day of subdued momentum, the Indian share market closed with significant losses on Thursday, with major benchmarks Nifty and Sensex falling into red zones by the end of the session. Volatility spiked across sectors, with midcap and smallcap stocks falling more sharply, indicating increasing investor wariness.
The day started on a positive note but could not maintain momentum as geopolitical tensions and global economic uncertainty kept sentiment in check.
A Promising Begin Fades Out by Closing Bell
Nifty 50 index started the day at 24,431.50, reflecting initial positivity. Likewise, Sensex also started the day in the positive, reflecting positive early trade. But this positive trend was short-lived.
At the end of the trading session:
- Nifty 50 closed 24,273.80, lower by 140.60 points or 0.58%
- Sensex closed at 80,334.81, lower by 411.97 points or 0.51%
Both indices traded close to flat levels for the most part of the day, with Nifty oscillating around the 24,400 level, without any significant directional bias until the sellers gained control in the second half.
US Fed Decision and Wall Street Rally Provide Limited Support
Wall Street indices closed higher overnight after the US Federal Reserve left interest rates steady, ignoring former President Donald Trump’s public campaign for a rate cut.
The Fed’s rationale: rising inflation risks and concerns about higher unemployment, signaling a cautious stance ahead.
Despite this positive momentum in the US market, Indian investors remained unmoved, as domestic factors overshadowed global cues. The Fed’s neutral policy tone offered little reassurance amid increasing regional instability.
Escalating India-Pakistan Tensions Rattle Market Sentiment
One of the most immediate catalysts for Thursday’s downturn was the worsening India-Pakistan border tensions, particularly after India’s Operation Sindoor aimed at terrorist camps within Pakistan following the Pahalgam terrorist attacks.
Cross-border shelling by the Pakistani army resulted in 15 civilian fatalities in Kashmir’s Poonch region, followed by additional firing along Kupwara, raising concerns of an extended war.
That political uncertainty would ordinarily spook money markets, make foreign investors tuck in and drive local participants to the edge.
Company Results Under Scanner as Market Awaits Its Cue
The market looked towards several biggies reporting or filing quarterly earnings on Thursday for cue on short-term direction. The list included:
- L&T
- Titan
- Britannia
- Pidilite
- Biocon
- Union Bank
- Bharat Forge
- Canara Bank
Others gaining attention were:
- Coal India
- Dabur
- Niva Bupa
- United Breweries
- Blue Star
- Sonata Software
- Somany Ceramics
- Asian Paints
Market players are carefully monitoring these reports for cues to future corporate performance, seeking signs that might temper wider market jitters.
Technical Check: Nifty Loses Key Support Zone
Technically, the fall below the 24,300 level on Nifty indicates a bearish break of a short-term support point. With the index still 1,862.95 points short of its record high of 26,277.35, the recent weakness adds pressure on bulls to get back into gear.
Sensex’s 411-point decline also hurt its recent rally, strengthening the likelihood of further correction if support levels continue to give way.
The deep cuts in midcap and smallcap stocks, usually more attuned to investor sentiment, add further credence to widespread weakness.
Market Outlook: Cautious Optimism or More Pain Ahead?
In the near term, volatility will likely remain high, propelled by:
- Geopolitical tensions
- Uncertainty over global monetary policy
- Expected signals from corporate earnings
While good news from the major sectors may give some relief, investor caution will prevail, particularly if border tensions rise or inflation fears increase.
For both traders and investors, capital protection and risk management should be the top priority in such a uncertain environment.
Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius
