On April 25, 2025, Indian stock markets experienced a significant downturn, with the BSE Sensex plunging over 1,000 points and the NSE Nifty50 declining by 338 points amid escalating geopolitical tensions between India and Pakistan. The turmoil was exacerbated by recent terrorist attacks in Pahalgam, Jammu and Kashmir, which left 26 dead, predominantly tourists, and prompted a severe response from Indian authorities.
The BSE Sensex opened at 79,830, slightly up from the previous close of 79,801, but quickly tumbled by 1,004 points to an intraday low of 78,797.39 by 11:30 AM. Similarly, the NSE Nifty50 started at 24,289 but fell sharply to a low of 23,908. This dramatic sell-off wiped out approximately ₹10 lakh crore in market capitalisation within just the first two hours of trading, raising alarms among investors.
Market analysts attributed the sharp decline to a combination of factors, primarily the heightened tensions following the Pahalgam terror attack and subsequent ceasefire violations along the Line of Control (LoC) by the Pakistan Army. Reports indicated that the Indian Army had effectively responded to these violations, leading to casualties on the Indian side. This situation has left investors apprehensive about the potential for further military escalation.
Prime Minister Narendra Modi addressed the nation, vowing to "identify, track, and punish every terrorist and their backers" involved in the Pahalgam attack, warning that those responsible would face retribution "beyond their imagination." This strong rhetoric, while aimed at reassuring the public, has also contributed to the prevailing market anxiety.
In addition to geopolitical concerns, the markets were affected by profit booking in key index heavyweights such as Axis Bank, Adani Ports, Bajaj Finance, and Tata Motors. Axis Bank, in particular, saw its shares drop by 4.28% after reporting a marginal decline in profits for Q4, raising concerns about asset quality and future earnings. The broader market reflected this sentiment, with the Nifty MidCap index and the Nifty SmallCap index down 2.85% and 3.30%, respectively.
The Volatility Index (VIX), a gauge of market fear, surged by 6.46%, indicating heightened investor apprehension regarding the ongoing situation. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the uncertainty surrounding India's response to the terror attacks is a significant headwind for the markets. He stated, "The potential headwind looming large on the horizon is the uncertainty regarding India's response to the terror attack and its consequences."
Despite the broader market downturn, some sectors managed to show resilience. The Nifty IT Index emerged as the only sectoral index in the green, buoyed by strong performances from companies like Infosys and TCS, which rose by 0.62% and 0.70%, respectively. This divergence highlights the selective nature of the market's response to the prevailing conditions.
Furthermore, foreign institutional investors (FIIs) have been net buyers, accumulating equities worth ₹29,513 crore over the last seven trading sessions, the longest continuous buying streak since October 2024. This influx of capital indicates that some investors remain optimistic about the long-term prospects of the Indian market, despite the current volatility.
As the day progressed, the market continued to react to the geopolitical climate. Shares of InterGlobe Aviation, the parent company of IndiGo, dropped by as much as 6% due to rising tensions affecting aviation stocks. The uncertainty surrounding the geopolitical situation is putting pressure on airline stocks as well.
In light of the ongoing developments, the Indian government has taken precautionary measures, including revoking all visas issued under the SVES to Pakistani nationals and advising Indian nationals residing in Pakistan to return home. This move, coupled with the suspension of the Indus Waters Treaty, has further strained relations between the two countries.
Investors are now closely monitoring earnings reports from major companies, including Reliance Industries and Maruti Suzuki, which are set to be released later in the day. Market participants are particularly cautious ahead of the weekend, as uncertainties regarding geopolitical tensions may influence trading strategies.
In summary, the Indian stock market faced a turbulent day on April 25, 2025, as geopolitical tensions with Pakistan and mixed earnings reports weighed heavily on investor sentiment. With the markets down significantly, analysts suggest that investors should remain vigilant and consider the potential for further corrections in the coming days.
