Stocks plunge amid escalating Indo-Pak tensions; Rupee sees worst fall in over 2 years

The domestic equities closed sharply lower on Thursday, with the benchmark Sensex and Nifty indices erasing early gains amid escalating geopolitical tensions between India and Pakistan. The rupee also recorded its steepest single-day decline in more than two years.

The S&P BSE Sensex fell 412 points, or 0.51%, to close at 80,335, while the NSE Nifty 50 dropped 141 points, or 0.58%, to end at 24,274. The broader market sentiment worsened, with the advance-decline ratio turning negative at 1:3, indicating widespread selling pressure.

The Indian rupee slumped nearly 1.5%, closing at 85.71 per dollar, marking its biggest single-day fall since early 2023. The currency's decline was attributed to heightened geopolitical risks following India's military strikes in Pakistan, which raised concerns about potential escalation in the region.

Market breadth was overwhelmingly negative, with 45 of the 50 Nifty stocks closing in the red. The Nifty Bank index fell 245 points to 54,366, and the Nifty Midcap index plunged 1,059 points to 53,229. Notable losers included UPL, which dropped 5% after China imposed an anti-dumping duty on its cypermethrin exports, and Voltas and Blue Star, which slipped 2-5% following disappointing Q4 earnings.

In contrast, Canara Bank gained over 2% following strong Q4 results. Stocks of Symphony and Niva Bupa rose 7-8% after reporting healthy earnings.

Investors are closely monitoring developments in the region and the currency markets, as further escalation could impact market stability.