Market Reacts to Geopolitical Tensions

Investors on Dalal Street were spooked by escalating tensions between India and Pakistan, leading to a significant drop in the stock market. The Sensex closed 589 points lower at 79,213, while the Nifty on the NSE lost 207 points to settle at 24,039.

Profit-Taking and Foreign Investment

Market players noted that some profit-taking after a seven-session gain, which added about 8.5% to each of the indices, also contributed to the slide. Despite the downturn, foreign funds showed a net buying of Rs 2,952 crore, indicating a possible shift in sentiment towards bullishness on India.

Impact Beyond Blue-Chip Stocks

The selloff was particularly severe outside of blue-chip stocks, with BSE's midcap and smallcap indices closing 2.4% and 2.6% down, respectively. Vinod Nair of Geojit Investments pointed out that investor sentiment turned cautious amid the geopolitical tensions, with mid and smallcap stocks bearing the brunt due to their elevated valuations.

Looking Ahead

Despite the current challenges, foreign portfolio investors (FPIs) have shown signs of renewed interest in the Indian market, with net buying of stocks worth Rs 31,200 crore since April 16. This recent surge has significantly reduced the net outflow figure for fiscal 2026 to just Rs 5,678 crore.