Indian equity markets witnessed a sharp fall in Friday’s trading session, with benchmark indices BSE Sensex and Nifty50 ending in negative territory after initial gains. The selloff was driven by rising geopolitical concerns following a terror attack in Kashmir, coupled with weak corporate earnings and valuation pressures.
The BSE Sensex closed 589 points or 0.74% lower at 79,212.53, after plunging over 1,000 points during the day. Meanwhile, the Nifty50 ended at 24,039.35, down 207 points or 0.86%, briefly slipping below the 24,000 mark during intraday trade.
Geopolitical Concerns Spark Investor Anxiety
Investor sentiment turned cautious following a terrorist attack in Pahalgam, Kashmir, which claimed 26 civilian lives. The incident heightened tensions between India and Pakistan, further intensified by India’s diplomatic downgrade and suspension of the Indus Water Treaty. Market participants fear potential retaliatory actions, adding to the volatility.
“Geopolitical unease has resurfaced after the Pahalgam incident, and the uncertainty surrounding India’s response has made markets jittery,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Profit Booking and Valuation Concerns
The recent rally in the markets, which saw the Nifty surge 8.6% over seven consecutive sessions, also prompted profit-taking. Analysts believe stretched valuations and a technically overbought zone contributed to the pullback.
“The market had rallied sharply in recent sessions, and with the geopolitical risks rising, investors chose to book profits,” noted Devarsh Vakil, Head of Prime Research at HDFC Securities.
Banking Stocks Lead Decline
The banking sector played a pivotal role in dragging indices lower. Shares of Axis Bank, SBI, and Bajaj Finance were among the top losers, with additional pressure from Kotak Mahindra Bank, HDFC Bank, and ICICI Bank. Axis Bank saw a drop after reporting a marginal decline in Q4 net profit to ₹7,117 crore from ₹7,130 crore in the same quarter last year.
Banking stocks collectively shaved over 360 points off the Sensex, reflecting sector-specific stress amid moderate earnings.
Mixed Corporate Earnings Add Pressure
Corporate earnings for the fourth quarter have so far been underwhelming. Hindustan Unilever (HUL) reported only 2% revenue growth and failed to meet profit expectations due to sluggish urban consumption. In the tech space, Infosys and Wipro issued conservative forecasts, dampening investor optimism about future growth.
According to analysts, year-on-year earnings per share (EPS) growth is projected at around 8%, indicating a modest outlook for corporate profitability in the near term.
Technical Outlook and Market Range
Following a consistent upward movement over the past week, the Nifty is showing signs of entering a corrective phase. Market experts believe the index is likely to oscillate within the 24,000–24,500 range in the near term, with traders waiting for clarity on both global and domestic cues.
“With the recent uptrend now cooling, the Nifty could remain range-bound between 24,000 and 24,500 until fresh triggers emerge,” said Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities.
Policy Measures Offer Long-Term Hope
Despite short-term pressures, analysts acknowledge the supportive role of government and RBI policies aimed at boosting GDP growth. However, global trade challenges and regional tensions may delay any significant market recovery.
“The government’s policy measures are aimed at sustaining long-term growth, but immediate gains are being weighed down by external uncertainties,” InCred Equities noted in a report.
