Indian stock markets witnessed a sharp selloff on Friday, May 9, 2025, as heightened Indo-Pak tensions rattled investor confidence, triggering a widespread decline across indices. The BSE Sensex plunged over 880 points intraday, while the Nifty50 dropped more than 265 points, reflecting a clear shift towards risk aversion amid escalating geopolitical concerns.
Why is the Stock Market Falling Today?
By 3:30 AM, the Sensex down 880 points lower at 79,454.47, and the Nifty50 fell 265 points, holding just above the crucial 24,000 mark. Broader market indices were also under pressure, with small-cap and mid-cap stocks slipping up to 2%, underlining a comprehensive selloff across sectors.
Indo-Pak Border Tensions Trigger Market Jitters
The market downturn is primarily being attributed to overnight drone and munition attacks by Pakistani forces along the western border, as reported by the Indian Army. The situation escalated further after explosions were heard in Jammu late Thursday night, with Islamabad allegedly targeting Indian military installations in Kashmir.
While a major crash was avoided in early trade, the increased threat of full-scale military escalation spooked investors, causing them to unwind positions heading into the weekend.
Volatility Surges to One-Month High
Market volatility soared, with the India VIX (Volatility Index) hitting a one-month high, marking its eighth consecutive session of gains. Analysts believe that investors had largely underestimated the risk of military conflict, leading to a sharper market reaction when tensions intensified.
A senior trader quoted by Reuters mentioned, “We’re unwinding all risk positions… if tensions flare further over the weekend, early next week could see more selloffs.”
Defence Stocks Buck the Trend
Despite the widespread losses, defence sector stocks stood out as gainers. Shares of Bharat Electronics Ltd. (BEL) and Hindustan Aeronautics Ltd. (HAL) rose between 2–3%, as investors bet on a potential rise in defence procurement and strategic investments. Consequently, the Nifty Defence Index was the sole gainer among the 14 sectoral indices on the NSE.
Experts Urge Caution, Not Panic
Market experts are advising investors to remain calm and avoid panic-driven decisions. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that India’s strong economic fundamentals and military superiority could help cushion the impact of the geopolitical crisis.
He added that robust GDP growth, declining inflation, and continued foreign institutional investor (FII) inflows over the past 16 sessions provide support for a long-term positive outlook.
Geopolitical Risk, Not Economic Fundamentals
In summary, today’s market correction is driven by geopolitical risk, not by economic weaknesses. If tensions between India and Pakistan de-escalate, analysts believe the markets could rebound swiftly, given the underlying macroeconomic strength.
Conclusion
The Sensex and Nifty’s sharp drop on May 9 underscores the impact of geopolitical shocks on investor sentiment. While the situation remains fluid, experts suggest that long-term investors should focus on fundamentals and avoid knee-jerk reactions to short-term volatility.