India-Pakistan conflict: D-st investors lose Rs 3.5 lakh crore at open; Sensex, Nifty rebound

Indian investors lost Rs 3.5 lakh crore at the opening tick on Friday as the total market capitalization of all BSE-listed companies crashed to Rs 415.01 lakh crore in the early trade amid the rising tensions at the border with Pakistan. The total market capitalization of all BSE-listed companies settled at Rs 418.51 lakh crore on Thursday.

However, Indian benchmark indices managed a smart rebound after a knee-jerk reaction on Friday. BSE Sensex rebounded nearly 1,065 points to 80,032.93, while NSE's Nifty 50 recovered more than 220 points to 24,158.70 at the opening tick. Fear gauge India VIX also soared to 22.73 mark, before falling to 21.78, up nearly 4 per cent for the day.

Under normal circumstances, on a day like this, the market would have suffered deep cuts. But this is unlikely due to two reasons. One, the conflict, so far, has demonstrated India’s clear superiority in conventional warfare, and further escalation of the conflict will inflict huge damage to Pakistan, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

"Two, the market is inherently resilient, supported by global and domestic macros. Weak dollar and potentially weakening US and Chinese economies are good for the Indian market. The domestic macro construct is further rendered stronger by the high GDP growth expected this year and the declining interest rate environment," he said.

In the 30-pack sensex, result bound stocks including Titan Company and Larsen & Toubro (L&T) jumped 4 per cent each. Tata Motors gained 1.5 per cent, while Kotak Mahindra Bank was also seen in green. On the downside, Power Grid dropped about 1.75 per cent, while Tata Steel and ICICI Bank dropped over 1.35 per cent each.

Domestic factors are likely to have a bearing on local equities as a pick-up in war activity between India and Pakistan could unnerve investors in early trades, said Prashanth Tapse, Senior VP (Research) at Mehta Equities. "Profit-taking is likely to continue as investors fearing worse going ahead could trim their equity holdings despite the global mood remaining optimistic," he said.

Investor sentiment appears, however, remained feeble amid thanks to a sharp escalation in the India-Pakistan tensions. According to Indian Army reports, Pakistan attempted to target military installations in Jammu, Pathankot, and Udhampur using missiles and drones. These attacks were taken down successfully by the Indian army.

The immediate support for the Index is placed at 24,000, while resistance is seen near 24,250 and crucial support and resistance levels for Bank Nifty are marked at 53,640 and 54,600, respectively, said Aditya Gaggar, Director at Progressive Shares. "A cautious approach is advised as elevated geopolitical risks could lead to sharp volatility, making it a 'wait and watch' scenario", he said.