Opening Bell: Will Sensex, Nifty react negatively to India-Pakistan conflict? Defence, aviation stocks in focus

The Indian share market is poised to open sharply lower on Friday, undermining firm cues from global peers, due to escalated tensions with Pakistan, marked by increased cross-border exchanges. At 8:05 a.m., the GIFT Nifty index was down 211 points, or 0.86%, at 23,980, signaling gap-down opening for domestic equity benchmarks BSE Sensex and NSE Nifty. The weak trends in the GIFT Nifty indicate that the domestic market may see some consolidation amid cautious sentiment as India-Pakistan border tensions rise. On the sectoral front, defence, aviation, and hospitality will be in focus.  

On Thursday, the domestic bourses continued range-bound trade and ended in negative terrain as investors booked some profit amid heightened uncertainty because of geopolitical tensions. The Sensex ended down 412 points, or 0.51%, at 80,335, while the Nifty50 dropped 141 points, or 0.58%, to settle at 24,274. The broader markets were worst hit for the second consecutive session, with the Nifty Smallcap 100 and Midcap 100 indices plummeting by up to 1.5%.

The market breadth, indicating overall strength, was negative, with 2,570 stocks out of 4,033 shares traded on the Sensex ending in the red zone. On the other hand, 1,335 shares advanced and 128 closed unchanged. India’s VIX index rose 10.2% to a one-month high of 21.01, indicating higher volatility levels and investor nervousness amid ongoing geopolitical developments.

Global equity markets rally

In overnight trade, Wall Street ended higher as investors cheered a tariff deal between the U.S. and the U.K., the first after President Donald Trump announced aggressive tariffs on its trading partners on April 2. The sentiment was further lifted amid hopes of a trade deal with China. The Dow Jones Industrial Average and the S&P 500 rose 0.6% each, while the tech-heavy Nasdaq Composite gained 1.1%.

Tracking firm cues from Wall Street, equity markets in the Asia-Pacific region also saw buying activities amid hopes of easing trade tensions between the U.S. and China. Japan’s Nikkei 225 was the top performer in the region, rallying up to 1.5%. Singapore’s Straits Times surged 0.8%, Hong Kong’s Hang Seng index added 0.2%, while China’s Shanghai Composite fell nearly 0.4% in early trade. Among others, Taiwan Weighted index climbed up to 1%, while Indonesia’s Jakarta Composite and South Korea’s Kospi rose up to 0.2%. Meanwhile, Australia’s ASX 200 ended 0.5% higher.

Analysts' view on market

The market volatility is expected to persist as investors track further developments on the India-Pakistan front and U.S. trade announcements, said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd.

Investors are advised to stay cautious, avoid aggressive positions, and focus on fundamentally strong stocks with limited near-term exposure to geopolitical risks. Defensive sectors and quality large-caps may offer better stability in the current environment, said Shrikant Chouhan, Head-Equity Research, Kotak Securities.

As long as the equity benchmarks Nifty50 and Sensex trade around 24,450 and 80,900 levels, the weak sentiment is likely to continue, he said. On the downside, the indices could retest the levels of 24,150-24,100 and 80,000-79,700, while levels above 24,450 and 80,900 could lift sentiment.

“If the market breaks below 24,200, we may see an increase in weakness throughout the day, potentially leading to a retest of levels 23,900 or 23,850, which were tested nine days ago. For a bullish market, it is essential to maintain levels above 23,800 on a closing basis; otherwise, the likelihood of a drop to 23,500 increases significantly,” he said.

On Bank Nifty, Bajaj Broking said that the index saw profit booking around 55,000 levels amid the escalation of geopolitical tensions, which saw the index give up its gains and close the session down by 0.45%. The index formed a bear candle highlighting profit booking at higher levels. “Key observation is that the last 10 sessions consolidation is inside a channel. We expect it to extend the consolidation in the range of 53,000-56,000, thus working off the overbought conditions created by the recent sharp rally.” On the downside, key support is seen between 53,000-53,500 levels being the previous major breakout area and previous gap-up area.

Stocks to watch

Among individual stocks, shares of Larsen & Toubro, Britannia Industries, Titan, Union Bank of India, Dilip Buildcon, Biocon, MCX India, Zee Entertainment Enterprises will be in focus after they released their March quarter earnings reports on Thursday.

Today, Dr Reddy's Laboratories, Swiggy, ABB India, Bank of India, Birla Corporation, Cera Sanitaryware, Cholamandalam Financial Holdings, Manappuram Finance, Great Eastern Shipping Company, India Shelter Finance Corporation, Jupiter Life Line Hospitals, Motherson Sumi Wiring India, Navin Fluorine International, Novartis India, PTC India Financial Services, and Thermax will announce their Q4 results today.