The Indian stock market started the day with a marginal decline, as investors reacted to the recent diplomatic measures taken by the government in response to the terror attack in Pahalgam. The Nifty 50 index, which serves as a benchmark for the Indian stock market, began the day at 24,277.90, registering a fall of 51.05 points or 0.21 per cent.

• Market experts pointed to the potential impact of escalating tensions with Pakistan on capital inflows in the near term.
• They noted that the underlying fundamentals of the Indian economy remain strong, with foreign portfolio investment (FPI) inflows continuing.
• Despite the positive sentiments, the market experts warned that the risk of capital outflows could arise from the deteriorating geopolitical situation.

The BSE Sensex, which tracks the performance of the Bombay Stock Exchange, also began the day in the red, opening lower at 79,982.18, down by 134.31 points or 0.17 per cent. The Nifty PSU Bank, Nifty Media, and Nifty Auto indices were among the sectoral indices that opened in the red, while Nifty FMCG, Nifty IT, and Nifty Pharma started the session in the green.

Ajay Bagga, a banking and market expert, stated, “Global cues are positive, FPI inflows are positive, and earnings in pockets are positive. The Indian market breadth has turned decidedly positive. However, the overhang remains for the next 10 days to 15 days, similar to the previous instances from the terrorist strike to the retaliatory Uri and Balakot strikes.”
He further emphasized that the diplomatic measures announced by the government, while significant, will require major infrastructure execution to make an impact on the ground. The market expert also highlighted the potential for a volatility pickup over the next two sessions, given the time cluster in which the market is currently operating.

• Akshay Chinchalkar, Head of Research, Axis Securities, pointed to the recent rally in the Nifty index, which rose for the seventh day, and the potential for a stall in the rally due to indecision.
• Chinchalkar also mentioned that the immediate support and resistance levels for the Nifty index are 24120 and 24500, respectively.
• He emphasized the importance of a volatility pickup in the next two sessions, given the current market conditions.

The broader Asian markets presented a mixed picture, with Japan’s Nikkei 225 index surging over 1 per cent, while Singapore’s Straits Times remained flat but in the green, gaining 0.13 per cent. Taiwan’s Taiwan Weighted declined by 0.62 per cent, and South Korea’s KOSPI dropped by 0.45 per cent. Hong Kong’s Hang Seng index was down by 1.51 per cent, indicating a decline in investor sentiment. The mixed performance of the Asian markets added to the uncertainty in the Indian stock market, making it challenging for investors to make informed decisions.

Key Takeaways

* The Indian stock market opened with a marginal decline due to geopolitical tensions with Pakistan. * Market experts pointed to the potential impact of escalating tensions on capital inflows in the near term. * The underlying fundamentals of the Indian economy remain strong, with foreign portfolio investment inflows continuing. * The market experts warned that the risk of capital outflows could arise from the deteriorating geopolitical situation.

Conclusion

The Indian stock market’s response to the recent diplomatic measures and the terror attack in Pahalgam highlights the ongoing challenges faced by the market. As the situation with Pakistan continues to deteriorate, investors are likely to remain cautious, waiting for a clearer picture of the market’s trajectory. The market experts’ warnings about the potential impact of escalating tensions on capital inflows underscore the need for investors to remain vigilant and adapt to changing market conditions.