Sensex, Nifty fall as India-Pak tensions rise; fear index India VIX jumps 10%

Domestic benchmarks experienced a sharp fag-end correction on Thursday as tensions between India and Pakistan continue to escalate. The 30-share BSE Sensex pack slipped 412 points or 0.51 per cent to close at 80,334.81 and the broader NSE Nifty index moved 141 points or 0.58 per cent to end at 24,274. Broader indices tanked up to 1.95 per cent.

India VIX, a fear index which measures market volatility, spiked 10.21 per cent to 21.01, as per NSE data. The index measures expected market volatility based on Nifty50 index options contracts. A rise in India VIX indicates that investors anticipate higher uncertainty or risk over the short term (30 days). When the volatility index rises, stocks usually tend to fluctuate, making it difficult to predict future market movements.

Investor wealth, as suggested by the BSE market capitalisation (m-cap), fell around Rs 5 lakh crore to Rs 418.50 lakh crore compared with a valuation of Rs 423.50 lakh crore recorded in the previous session. Frontline stocks such as HDFC Bank, Bharti Airtel, Mahindra & Mahindra (M&M), ICICI Bank, Eternal (formerly Zomato), Maruti and SBI contributed to the fall today.

On the sector-specific front, metal was the worst performer, down 2.09 per cent, while sub-index Nifty IT climbed.

"There is a lot of caution in the markets as investors are worried that the ongoing tension resulting in a major conflict between the two nuclear-powered nations going ahead could spark a major sell-off in equities, and hence profit-taking was seen in almost all the sectors barring select IT counters. With the local currency depreciating sharply amid the ongoing stand-off, foreign investors could flee from domestic equities to park their funds in overseas safe-haven assets," said Prashanth Tapse, Senior VP (Research) at Mehta Equities.

Last night, the S-400 Sudarshan Chakra air defence missile systems of the Indian Air Force (IAF) were fired against Pakistani targets moving towards India. The targets were successfully neutralised in the operation. On the intervening night of May 7-8, Pakistan attempted to engage a number of military targets using drones and missiles in northern and western India.