Sensex, Nifty Plunge Amid India-Pakistan Tensions; Investors Lose ₹2 Lakh Crore in a Day

Heightened geopolitical uncertainty drags Indian equity markets for a second day; frontline indices shed over 1% as investors brace for further volatility.

May 9, 2025: Indian equity markets extended their losses for a second consecutive session on Friday, May 9, as escalating tensions between India and Pakistan continued to spook investors. The Sensex dropped 880 points, or 1.10%, to close at 79,454.47, while the Nifty 50 fell 266 points to settle at 24,008, also down 1.10%.

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Despite the sharp fall in large-cap indices, the broader markets displayed relative resilience. The BSE Midcap index declined by just 0.10%, and the Smallcap index dipped 0.30%.

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This selloff led to a significant erosion in investor wealth, with the total market capitalisation of BSE-listed companies shrinking from ₹418.5 lakh crore to ₹416.8 lakh crore — a single-day loss of around ₹2 lakh crore.

Weekly Summary:

Over the week, the Sensex declined by 1.30%, and the Nifty by 1.40%, snapping their three-week winning streak.

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Why the Market Dropped:

Investor sentiment turned risk-averse after India confirmed it had neutralised a Pakistani air defence system in Lahore. This development followed Pakistan’s failed attempts to strike multiple Indian military targets across Northern and Western India.

“The geopolitical tensions have injected substantial uncertainty. Traders are booking profits and reducing exposure ahead of the weekend, fearing further escalation,” said Prashanth Tapse, Senior Vice President (Research) at Mehta Equities. “Even though global markets are stable, the domestic sentiment has taken a hit,” he added.

Outlook:

With the weekend ahead and the possibility of further military developments, traders remain cautious. Analysts suggest that the next session’s direction will largely depend on how the geopolitical situation evolves.

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