Indian Markets Shrug Off Geopolitical Tensions as Domestic Factors Take Centre Stage, Sensex and Nifty Close in Green
India's equity benchmarks, the Sensex and Nifty, displayed remarkable resilience on Wednesday, 7 May 2025, ending the trading session in the green despite heightened geopolitical tensions following Indian armed forces' strikes on terror targets in Pakistan and Pakistan-Occupied Kashmir. While early trade saw heightened volatility, including an initial dip, the markets staged a recovery to close higher.
Market Performance Amidst Volatility
The Sensex finished the day 106 points higher at 80,746.78. Similarly, the Nifty closed 34.80 points (0.14%) higher above 24,200 at 24,414.40. This stability contrasted sharply with the reaction seen in Pakistan, where the KSE-100 benchmark share index opened with a significant 6% cut after the strikes. The India VIX, a measure of market volatility, also eased during the day.
The Resilience Factor
The Indian market remained largely steady amid geopolitical tensions, supported by strong FII inflows and limited trade exposure to Pakistan. Analysts noted that past market resilience, even amid positive macro cues and earnings, reflects underlying strength. The muted reaction was attributed to expectations of de-escalation and parallels with previous incidents. Markets were seen tracking three key triggers: potential further military action, global tariff developments, and the US Fed's policy announcement. While some warned of short-term risks if tensions escalate, the immediate market response remained composed.
Key Sectors and Corporate Highlights
Sectoral movements were mixed, with Realty (1.12%) and Auto (1.66%) stocks shining, Metal stocks (0.98%) trading in the green, and Financials (0.96%) also positive. Conversely, FMCG (-0.52%) and Pharma (-0.33%) indices traded in the red.
Individual stocks saw notable moves based on news and results:
Tata Motors shares gained amid demerger buzz and closed 5% higher.
Defence stocks rallied following 'Operation Sindoor', with some surging up to 50% in the preceding month and up to 4% on the day.
Textile stocks rallied significantly, up to 19%, on optimism about zero-tariff access to the UK market under a potential India-UK FTA, which also led to Liquor stocks tumbling due to slashed import duties on Scotch whisky and gin.
State-owned Punjab National Bank (PNB) reported a strong Q4 with net profit surging 52% year-on-year to ₹4,567 crore.
HUDCO's Q4 net profit rose 4% YoY to ₹728 crore, though shares fell after results.
RattanIndia Power's Q4 net profit nosedived due to a high base from a one-time gain in the previous year.
MRF posted strong Q4 results with Net Profit up 31.2% YoY to ₹498 crore and announced a dividend of ₹229 per share.
Paytm shares rallied over 7.19% after its Q4 loss narrowed.
KEI Industries shares rose 3.20% as its Q4 profit jumped 34%.
Welspun Corp secured a large export order worth ₹1,950 crore.
Broader Market Influences
Beyond the geopolitical landscape, several other factors influenced trading. The Indian Rupee weakened against the US dollar, falling 31 paise to 84.66 in early trade and declining in the non-deliverable forward (NDF) market following the strikes. While domestic and global markets were seen as potentially supporting the Rupee, geopolitical tensions and positive crude oil prices were expected to cap sharp upside.
Oil prices rose for a second straight session, supported by optimism over upcoming US-China trade talks and signs of declining US shale output. The US Federal Reserve's interest rate decision, expected later in the day, remained a key focus point for global markets. Traders were also assessing earnings reports, with various companies like Coal India, Dabur, MRF, and HUDCO scheduled to announce Q4 results.
Overall, despite the significant geopolitical development, the Indian market's focus appeared to be quickly shifting back to domestic earnings, global monetary policy cues, and company-specific news.
Current Market Update
- The Sensex is trading at 80,628.68 down by 12.39 points or -0.012%.
- The NSE Nifty 50 is trading at 24,387.85 up by 10.40 points or 0.05%.
Top 5 Gainers in the Market
- Opening Price: ₹642.00
- Current Market Price (LTP): ₹672.80
- Percentage Change: +3.80%
Tata Motors led the market gains, surging nearly 4%. The rally follows strong April sales data and positive commentary on electric vehicle adoption. The company has also benefited from robust demand in both domestic and export markets.
- Opening Price: ₹3,280.00
- Current Market Price (LTP): ₹3,352.90
- Percentage Change: +1.62%
Titan shares advanced after the company reported double-digit growth in jewellery and watches segments for April. The company’s sustained market share gains and festive season demand have fuelled investor optimism.
- Opening Price: ₹308.00
- Current Market Price (LTP): ₹312.20
- Percentage Change: +1.50%
Power Grid rose as investors responded positively to its stable operational performance and expansion in transmission projects. The company’s focus on green energy corridors and government infrastructure push have supported the uptrend.
- Opening Price: ₹8,750.00
- Current Market Price (LTP): ₹8,910.00
- Percentage Change: +1.28%
Bajaj Finance gained after reporting strong quarterly loan growth and healthy asset quality in its latest business update. Analysts have cited the company’s diversified loan book and digital initiatives as key drivers for the rally.
- Opening Price: ₹630.00
- Current Market Price (LTP): ₹637.40
- Percentage Change: +1.15%
Hindalco shares climbed on the back of rising global aluminium prices and expectations of improved margins. The company’s recent capacity expansion and cost control measures have also boosted sentiment among investors.
Top 5 Losers in the Market
Asian Paints (ASIANPAINT)
- Opening Price: ₹2,388.00
- Current Market Price (LTP): ₹2,385.60
- Percentage Change: -1.34%
Asian Paints led the losses, declining 1.34%. The drop comes amid concerns over rising raw material costs and margin pressures. Additionally, subdued demand in the decorative paints segment has weighed on investor sentiment .
Sun Pharma (SUNPHARMA)
- Opening Price: ₹1,817.90
- Current Market Price (LTP): ₹1,796.00
- Percentage Change: -1.27%
Sun Pharma shares slipped 1.27% following profit booking after a recent rally. The decline is also attributed to regulatory headwinds in the US market and expectations of slower growth in specialty drug sales, as reported in sector updates .
IndusInd Bank (INDUSINDBK)
- Opening Price: ₹827.00
- Current Market Price (LTP): ₹822.60
- Percentage Change: -1.11%
IndusInd Bank fell 1.11%, pressured by concerns over asset quality and rising slippages in its retail loan portfolio. Recent quarterly results showed an uptick in non-performing assets, prompting cautious investor sentiment.
Nestle India (NESTLEIND)
- Opening Price: ₹2,331.00
- Current Market Price (LTP): ₹2,335.30
- Percentage Change: -0.90%
Nestle India declined 0.90%, with analysts citing margin compression due to higher input costs and muted volume growth in packaged foods. The company’s cautious outlook for rural demand has also contributed to the stock’s weakness.
Grasim Industries (GRASIM)
- Opening Price: ₹2,699.00
- Current Market Price (LTP): ₹2,705.80
- Percentage Change: -0.84%
Grasim Industries lost 0.84%, tracking profit booking after a recent uptrend. The market is also factoring in concerns about margin pressures in its core businesses and a cautious outlook on the cement and viscose segments.
Sensex: Down 460.67 points (-0.57%) at 80,180.40
Nifty 50: Down 138.10 points (-0.57%) at 24,241.50
Pre-open session: Sensex fell by more than 800 points; Nifty slipped below 24,250
Factors Influencing Market Sentiment
India's rollout of "Operation Sindoor," a coordinated assault on nine terrorist hotbeds in Pakistan and Pakistan-occupied Jammu and Kashmir (PoK), has increased investor apprehension. Pakistan has classified this as 'an act of war' and threatened to retaliate. This is a major escalation after the first of its kind of joint services initiative since the 1971 war. Consequently, defence stocks are expected to be in the limelight today. The border tensions should add to the market volatility.
Rupee Weakens: The Indian rupee opened 19 paise lower at 84.62 per U.S. dollar, mirroring geopolitical concerns. The 1-month non-deliverable forward (NDF) market indicated a possible onshore opening range of 84.64–84.68, against Tuesday's close of 84.4325
Global Backdrop:
U.S. Federal Reserve Decision: The Federal Reserve is widely expected to keep interest rates unchanged in its policy decision due later today. However, commentary from Chair Jerome Powell on inflation and economic growth could impact short-term market direction.
China's Monetary Policy: China's central bank lowered a key interest rate by 0.25 percentage points to 1.5% and cut the reserve requirement ratio to try to jumpstart its sluggish economy, which is struggling with anemic consumer spending and the problems of the property sector.
Stocks likely to be in the limelight today on account of news or results are Coal India, Dabur, BSE, Paytm, and Prestige Estates. Other stocks pointed out for attention are eMudhra, KEI Industries, Piramal Enterprises, and Aarti Drugs.
Technical Outlook
Experts point out that the correction in larger markets has brought the Nifty down to the 24,380 level. A bearish engulfing pattern indicates a possible short-term reversal. Important support for the Nifty is located around 24,250 and 24,171, and there is a possibility of a downward move to 24,200 or even 24,000. Resistance is at 24,500 and 24,550. The position remains guarded unless the Nifty crosses the 24,550 level. Bank Nifty has crossed its earlier support of 54,570, which has become resistance, with new support around 53,640. PSU Banks and Realty sectors were very weak in the last session.
Other key Developments
RBI Guidance: The Reserve Bank of India has directed banks to inform corporate customers that a failure to correct earlier mistakes by August 25, 2025, may impact their capacity to enter into further foreign financial commitments.
SEBI Developments: The Securities and Exchange Board of India (SEBI) has seen the first applications for specialised investment funds (SIFs) and is likely to clear these in the near future. Further, the NSE has released compliance guidelines for safer retail participation in algorithmic trading.
IPO Approvals: Five firms, such as Laxmi India Finance and Veritas Finance, have obtained SEBI approval to launch their IPOs. Arunaya Organics will list on the SME platform today.
Oil Prices and Flight Disruptions: Oil prices rose on indications of improved demand in Europe and China and reduced U.S. output. Flights were also affected at various airports due to increased security fears after the strikes.
Stock to focus
Bank of Baroda: Posted a modest 3.3% rise in net profit for Q4 FY25. However, higher provisions and a weak net interest income led to a 15% drop in its share price.
BSE Ltd: Reported a significant increase in Q4 consolidated profit, up 362% year-on-year to ₹494 crore, with revenue surging 75% to ₹846.6 crore. The board recommended a dividend of ₹23 per share.
Polycab India: Registered a 33.09% year-over-year increase in consolidated net profit for Q4 FY25
Paytm: Registered a Q4 consolidated net loss of ₹540 crore, down from ₹550 crore in the prior corresponding quarter last year.
Fedbank Financial Services posted a 6% YoY increase in Q4 net profit to ₹71.7 crore and a 34.6% rise in Net Interest Income (NII) to ₹283.3 crore.
IndiaMART InterMESH recorded a 49.3% QoQ increase in Q4 consolidated net profit to ₹180.6 crore.
TPG sold a 3.9% stake in Tata Technologies for ₹1,068 crore in an open-market transaction.
Shoppers Stop's Q4 consolidated profit dropped 91.4% to ₹1.99 crore, while revenue edged up 1.68% to ₹1,064 crore.
Jana Small Finance Bank's March-quarter net profit declined 61.6% YoY to ₹123.5 crore, despite a slight increase in revenue.
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