Sensex, Nifty Set for Selloff Amid India-Pakistan Escalation; Defence Stocks in Spotlight

Geopolitical tensions weigh on investor sentiment as India retaliates to cross-border threats; defence stocks like BEL, HAL, and Bharat Forge poised for action.

New Delhi, May 9, 2025 –
Stock market indices Sensex and Nifty are expected to open sharply lower on Friday, reflecting investor concerns after heightened military tensions between India and Pakistan. Reports indicate that Pakistan launched missile and drone attacks on Jammu, Udhampur, and Pathankot, which were successfully intercepted by Indian defence forces.

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In a swift and forceful response, India is believed to have carried out retaliatory missile strikes on key Pakistani cities including Lahore, Islamabad, Sialkot, and Karachi, and even struck strategic naval bases in Karachi. This marks India’s first reported naval offensive since the 1971 war.

Market Outlook: Volatility Ahead

Gift Nifty was trading below the 24,000 level in early indications, suggesting a gap-down opening for Friday’s session. The BSE Sensex and NSE Nifty had already seen late-session weakness on Thursday as tensions escalated.

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“Investors should remain cautious, avoid aggressive short-term trades, and focus on fundamentally strong, low-risk stocks,” advised Vikram Kasat, Head – Advisory at PL Capital. Sectors like IT, FMCG, and defensive large caps may offer relative safety.

Defence Stocks in Focus

Shares of Bharat Electronics Ltd (BEL), Bharat Dynamics Ltd (BDL), Hindustan Aeronautics Ltd (HAL), and Bharat Forge are likely to remain in focus. Market participants are reacting to reports that the Modi government has summoned defence manufacturers to New Delhi next week, likely to discuss ramping up production amid ongoing hostilities.

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Baba Kalyani, CMD of Bharat Forge, confirmed to CNBC TV18 that “our team is going [to Delhi next week]… I can’t say more.”

Brokerage Anand Rathi remains bullish on India’s defence sector, especially long-term platform companies like Bharat Forge, and consumables makers such as Solar Industries and BDL.

India’s defence budget for FY2025-26 stands at ₹6.81 lakh crore, with ₹1.8 lakh crore earmarked for capital expenditure, providing a substantial pipeline for public and private defence firms.

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