The losses followed rising military tensions with Pakistan, which launched a counterattack under “Operation Bunyan-un-Marsoos.” This move came in response to Indian missile strikes earlier in the week. The Nifty 50 and BSE Sensex both fell 1.1% on Friday, ending a three-week rally. At one point, losses approached $108 billion before a mild recovery.
Experts say traders are now driven more by war headlines than market data. India’s “fear index” spiked for the eighth straight session. Sectoral losses were widespread—12 out of 13 indexes closed in the red. Small- and mid-cap stocks fell hardest, down 1.9% and 0.8%. Meanwhile, the Indian rupee weakened, forcing central bank intervention.
India accused Pakistan of backing a deadly attack in Pahalgam on April 22. In response, India shut the Wagah border and suspended Pakistani visas and the Indus Waters Treaty. Pakistan called the move an “act of war.” Then, on May 6 and 7, Indian airstrikes hit cities in Pakistan. Pakistan retaliated with air and missile strikes on Indian military targets.
It claimed to have downed five Indian jets, including four Rafales. Pakistan also said it intercepted 77 Harop drones launched by India. ISPR called the drone use a “desperate move.” The Al-Fatah missile was launched to honor children killed in recent attacks. Indian airbases and military posts were specifically targeted during the strikes.
Tata Motors was a rare gainer, up 8.7% due to optimism around a UK-US trade deal. Experts believe India’s economic strength and potential trade pacts may limit long-term losses. However, without diplomatic talks, markets may remain unstable. The world now watches closely, urging both sides to de-escalate before the crisis worsens.