The Indian stock markets are expected to open significantly lower on Friday due to rising geopolitical tensions between India and Pakistan that developed after market hours on Thursday.
Analysts suggest that these developments could lead to a sharp decline in the markets on Friday, but they do not anticipate that the Sensex and Nifty 50 indices will reach their respective lower circuit limits.
“On Friday, the markets will likely experience a substantial setback, although the likelihood of hitting a lower circuit at this point appears remote. I believe the Nifty could drop by more than 500 points, while the Sensex may fall by about 2,500 to 3,000 points if the geopolitical situation worsens with Pakistan. A formal update from authorities on the impact of the situation could calm investors and stabilize the markets. The ongoing uncertainty is intensifying market fears,” stated Ambareesh Baliga, an independent market analyst.
“The future of geopolitical events between India and Pakistan is unpredictable. This uncertainty will keep the markets on edge and could drive the Nifty down an additional 5 percent from current levels, regardless of global market conditions. The issues between India and Pakistan are localized events when viewed alongside global cues,” added U R Bhat, co-founder and director of Alphaniti Fintech.
For the Nifty 50 index to reach the lower circuit, it must decline by 10 percent to levels around 21,846.20 on Friday. If this occurs before 1 PM, trading will be paused for 45 minutes.
If the 10 percent lower circuit is triggered between 1 PM and 2:30 PM, a 15-minute trading halt will ensue, while a drop after 2:30 PM will not affect trading, according to exchange regulations.
Notable Nifty and Sensex thresholds to monitor include:
The Nifty’s 15 percent lower circuit at 20632.73.
If the Nifty reaches the 15 percent lower circuit before 1 PM, trading will stop for 1 hour and 45 minutes.
If it happens between 1 PM and 2 PM, trading will be suspended for 45 minutes.
Should the 15 percent circuit be hit after 2 PM, trading will cease for the rest of the day.
Additionally, if the Nifty hits the 20 percent lower circuit (19419.04 levels) at any time during the trading day, trading will be discontinued for the remainder of that day, per stock exchange regulations.
10 percent – 72301.329
15 percent – 68284.5885
20 percent – 64267.848
“I don’t foresee the Sensex and Nifty 50 reaching their respective lower circuits tomorrow, but a steep decrease is anticipated. I expect the mid-cap and small-cap sectors to be the most affected. At the index level, both mid-cap and small-cap indexes could decline by approximately 5 percent each, with some specific stocks in these sectors suffering declines exceeding 10 percent,” remarked G Chokkalingam, founder and head of research at Equinomics Research.