Stock Market Update: Sensex Drops 880 Points Amid Rising India-Pakistan Tensions
Date Published: June 13, 2025
The Indian stock market experienced a significant downturn on Friday, with the Sensex closing 880 points lower, settling at 24,888.20. The Nifty index also faced pressure, dropping below the key level of 24,050. ### Escalating Tensions Impact Trade
The steep decline in the stock market was triggered by escalating tensions between India and Pakistan following a series of drone and munitions attacks reported along the western border. Late Thursday, the Pakistani military targeted military installations in Jammu and Kashmir, marking a concerning rise in cross-border hostilities that have already resulted in nearly 50 casualties.
In light of the developing situation, investor sentiment soured dramatically, leading to a broad-based sell-off across all 13 major sectoral indices. Small- and mid-cap stocks were particularly hard-hit, dropping 2% and 1% respectively in the morning trade.
Key Market Movements
The volatility prompted the India VIX, a measure of market risk, to surge by 7%, underscoring growing investor anxiety. Sectors most affected included airlines, tourism, and real estate, which faced substantial selling pressure. Conversely, certain stocks experienced gains; notably, defense and drone manufacturing sectors saw significant buying interest as conflict concerns heightened. Drone stocks surged by up to 15%, while defense stocks rose as much as 4%.
In corporate earnings news, L&T’s shares jumped by 4% following announcement of a 25% increase in fourth-quarter profits, reaching Rs 5,497 crores. On the other hand, shares of MCX plunged nearly 7% after disappointing quarterly results.
Broader Economic Context
The escalating conflict has raised fears that foreign institutional investors, who had been actively buying Indian assets to the tune of Rs 50,000 crore, may reconsider their investment strategy. Some experts, like Dr. Ravi Singh from Religare, suggest that while defense and essential consumer staples may emerge as safe havens amid rising tensions, overall sentiment could lead to a more cautious investment climate in the near term.
Summary
As geopolitical uncertainties mount, the stock market’s reaction reflects heightened concerns over the potential for prolonged conflict between India and Pakistan. Market analysts are closely watching developments, cognizant that such tensions can ripple through various sectors impacting overall economic stability. The coming days may see continued volatility as investors navigate this fraught landscape.
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