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Key gauges end lower amid geopolitical tensions
May-08-2025

Indian equity benchmarks ended over a half percent lower on Thursday due to selling in Realty, Oil & Gas and Auto shares. The markets experienced a volatile session marked with a lackluster start and remained range-bound for most of the day. However, a sudden sharp decline was witnessed in the late afternoon session due to escalating tensions between India and Pakistan, marked by increased cross-border exchanges. 

Some of the important factors in today’s trade: 

Rupee slumps against US Dollar: Indian rupee depreciated sharply against the US dollar, weighed down by heightened geopolitical tensions between India and Pakistan. Besides, heightened geopolitical risks, positive US dollar index and a rise in crude oil prices also weighed on the rupee. 

FIIs stay net buyers of equities for 15th straight session: Foreign institutional investors (FIIs) stayed net buyers of Indian equities for the 15th straight session on Wednesday, as they bought stocks worth Rs 2,585.86 crore. The confidence shown by the overseas investors in Indian equities amid the escalating India-Pakistan tensions.  

Hostilities between India, Pakistan heighten risks to credit metrics of both countries: S&P Global Ratings has said that the hostilities between India and Pakistan heighten risks to the credit metrics of both countries, and any escalation in clashes would put downward pressure on sovereign credit support. 

India opens central government procurement for British companies under FTA: After the UAE, India has opened its central government procurement for British companies under the free trade agreement (FTA) announced on May 06, 2025. The British firms would be allowed to participate in the procurement of goods and services of the non-sensitive central-level entities only. 

Global front: Asian markets settled mixed on Thursday as growing concerns over escalating India-Pakistan tensions curbed investors' appetite for risk. European markets were trading higher as investors awaited the Bank of England's monetary policy announcement later in the day. 

Finally, the BSE Sensex fell 411.97 points or 0.51% to 80,334.81, and the CNX Nifty was down by 140.60 points or 0.58% to 24,273.80. 

The BSE Sensex touched high and low of 80,927.99 and 79,987.61 respectively. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.90%, while Small cap index was down by 1.05%.

The lone gaining sectoral index on the BSE was IT up by 0.12%, while Realty down by 2.60%, Oil & Gas down by 1.98%, Auto down by 1.92%, Power down by 1.86% and Utilities down by 1.85% were the top losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 1.05%, Kotak Mahindra Bank up by 0.81%, Axis Bank up by 0.80%, Titan Company up by 0.69% and Tata Motors up by 0.21%. On the flip side, Eternal down by 3.14%, Mahindra & Mahindra down by 2.85%, Maruti Suzuki down by 2.04%, Bajaj Finance down by 1.86% and Tata Steel down by 1.81% were the top losers.

Meanwhile, S&P Global Ratings has said that the hostilities between India and Pakistan heighten risks to the credit metrics of both countries, and any escalation in clashes would put downward pressure on sovereign credit support. S&P, which rates India and Pakistan at 'BBB-' with a positive outlook and a 'CCC+' (outlook stable), said that in the current scenario, it does not see any immediate impact on sovereign credit rating and expects the tensions to remain high over the next two to three weeks, with significant further military actions on both sides possible.

S&P said it expects India to maintain strong economic growth that allows gradual fiscal improvements to continue, and also the Pakistan government to remain focused on supporting the recovery of its economy and fiscal stability. Both countries have no incentive to allow current tensions to become prolonged. Recently, S&P cut FY26 India's growth forecast to 6.3 per cent, from 6.5 per cent pegged earlier, citing uncertainty over US trade policy. A protracted military conflict will derail the improvements to Pakistan's external and fiscal metrics that would support a return to macro stability.

For India, S&P said a prolonged military conflict will also lead to difficulty attracting foreign investors seeking to reconfigure their international production activities amid the uncertain global economic environment. It said the current situation raises the ‘specter of miscalculations and accidental clashes’ that could escalate well beyond the intentions of both sides. Such a scenario would materially worsen credit risks. The downward pressures on sovereign credit support will exacerbate if there is no material de-escalation in the next few weeks. It anticipates tensions to remain high over the next two to three weeks, with significant further military actions on both sides possible. However, it said the situation is likely to de-escalate following that, leaving little persistent negative impact on sovereign credit metrics.

The CNX Nifty traded in a range of 24,447.25 and 24,150.20. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 0.75%, HCL Technologies up by 0.56%, Kotak Mahindra Bank up by 0.54%, Titan Company up by 0.18% and Tata Motors up by 0.01%. On the flip side, Shriram Finance down by 4.48%, Eternal down by 4.18%, Mahindra & Mahindra down by 3.55%, Adani Enterprises down by 3.53% and Hindalco Industries down by 3.19% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 30.28 points or 0.35% to 8,589.61, France’s CAC rose 81.17 points or 1.06% to 7,708.01 and Germany’s DAX gained 253.31 points or 1.1% to 23,369.27.

Asian markets settled mixed on Thursday tracking Wall Street’s gains overnight as the US Federal Reserve left interest rates unchanged, as widely expected. Meanwhile, investors were awaiting cues from upcoming trade negotiations between China and the United States. The US and the UK are expected to announce a deal to reduce tariffs later today. Chinese markets rose as defense shares surged due to rising tensions between India and Pakistan in the wake of the Pahalgam attack, while Hong Kong markets gained after Chinese authorities rolled out interest rate cuts and other moves to help support the faltering economy. Moreover, Japanese markets ended up as chip-related shares followed their US peers higher. 

Asian Indices

Last Trade            

Change in Points

Change in %      

Shanghai Composite

3,352.00

9.33

0.28

Hang Seng

22,775.92

84.04

0.37

Jakarta Composite

6,827.75

-98.48

-1.44

KLSE Composite

1,542.74

-7.16

-0.46

Nikkei 225

36,928.63

148.97

0.40

Straits Times

3,848.22

-17.15

-0.45

KOSPI Composite

2,579.48

5.68

0.22

Taiwan Weighted

20,543.40

-3.09

-0.02
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