The India-Pakistan conflict and global cues such as the US Federal Reserve holding policy rates and US President Donald Trump announcing a trade agreement with the UK weighed in on different asset classes on Thursday.
The Indian stock market ended lower in a volatile session, with the benchmark BSE Sensex declining 411.97 points (0.51 per cent) to close at 80334.81. Selling pressure in banking, FMCG and auto stocks reflected investor sentiment of rising uncertainty.
The 30-share Sensex, which opened higher and remained range-bound in the first half, hit an intraday high of 80927.99 in late-morning trade. However, the index lost momentum in the afternoon as geopolitical developments prompted broad-based selling. It fell to a low of 79987.61 before recovering partially.
The NSE Nifty also closed in the red, dropping 140.60 points (0.58 per cent) to 24273.80. During the day, it touched a low of 24150.20, down nearly 1 per cent.
Vinod Nair, head of research at Geojit Financial Services, said the equity market saw profit-booking due to increasing India-Pakistan tensions and the US Fed’s concerns over inflation risks tied to aggressive US tariffs. Ajit Mishra, SVP of Research at Religare Broking, added, “Ongoing uncertainty continues to make traders cautious, potentially clouding the prevailing trend.”
Rupee falls
The rupee depreciated by 84 paise to close at 85.61 (provisional) against the US dollar on Thursday, weighed down by heightened geopolitical tensions between India and Pakistan. The Indian currency logged one of its sharpest fall in more than two years.
Forex traders said investors resorted to risk aversion after the Pakistani military forces targeted several military posts in northern and western India using drones and missiles that were neutralised by the Indian defence system.
Heightened geopolitical risks, a positive US dollar index and a rise in crude oil prices also weighed on the rupee.
“We expect the rupee to trade with a negative bias on the strong dollar and ongoing geopolitical tensions between India and Pakistan. Any further escalation may further pressurise the rupee. However, FII inflows may support the rupee at lower levels. Traders may take cues from weekly unemployment claims data from the US. USD-INR spot price is expected to trade in a range of 85.20 to 86,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.
Gold gains
Gold prices declined ₹1,500 to ₹99,250 per 10 grams in Delhi on Thursday, following a weak trend in the global markets, according to the All India Sarafa Association. The precious metal of 99.9 per cent purity had closed at ₹1,00,750 on Wednesday. In Calcutta, pure gold fell by ₹800 to ₹96950.
“Gold prices remained highly volatile as multiple global and domestic triggers played out simultaneously,” Jateen Trivedi, VP research analyst of commodity and currency at LKP Securities, said.