Markets extend losses as India-Pak tension escalates
Mumbai: The benchmark BSE Sensex surrendered early gains Wednesday to end in the negative terrain after a 600-point swing amid escalating cross-border tension between India and Pakistan. Investor sentiment took a beating after Pakistani fighter jets on Wednesday violated Indian air space in Jammu and Kashmir's Poonch and Nowshera sectors, experts said.
After opening on a positive note, the 30-share Sensex swung over 600 points as it turned volatile triggered by across-the-market selling by participants, finally settling 68.28 points, or 0.19 per cent, lower at 35,905.43. The gauge had lost 239.67 points Tuesday.
In similar movement, the 50-share Nifty ended 28.65 points, or 0.26 per cent, lower to 10,806.65. Intra-day, it moved between 10,939.70 and 10,751.20. "Indian market ended the day in the red after a volatile session as tension between India Pakistan escalated further," said Hemang Jani, Head-Advisory, Sharekhan by BNP Paribas.
One can expect the market to be volatile for the next few days as the political environment comes under pressure. Investors will remain cautious and look for clarity on the cross-border tension, he said, adding that there is need to understand that the fundamentals of the Indian market continues to remain strong.
"Inflation has remained tepid and globally we continue to be a preferred investment destination amongst emerging markets," he said. Pakistan on Wednesday claimed that it shot down two Indian military aircraft over Pakistani air space and arrested one of the pilots.
Later in the day, India's External Affairs Ministry said Pakistan has used its Air Force to target military installations in India in response to Indian counter-terrorism operations but their attempts were foiled successfully, though one Indian pilot is "missing in action".
The move came after the Indian Air Force on Tuesday struck Jaish-e-Mohammed's (JeM) biggest camp in Pakistan in a major "preemptive" action, killing a large number of terrorists and trainers of the Pak-based terror group preparing to carry out suicide attacks in India. Fears that foreign institutional investors (FIIs), who have been pumping sizeable funds into the Indian bourses in the past few sessions, may slow down their activity, too cast a shadow over domestic equities, experts said.