Market Jitters: Sensex Sheds 700 Points as Pahalgam Terror Attack Triggers Investor Caution

Sensex: In a stark reminder of how swiftly geopolitics can shake market confidence, Indian stock markets tumbled on Friday, wiping out early morning gains and dashing hopes of a continued rally. The slide follows the tragic terror attack in Pahalgam, which not only shocked the nation but also ignited a wave of diplomatic and economic uncertainty.

At the closing bell, the Sensex plunged by 773 points, settling at 79,028.29 — a sharp 0.97% dip. The Nifty wasn’t spared either, slipping 276 points to close at 23,970.60, marking a 1.14% fall. The intraday low of Sensex touched 78,605, painting a clear picture of investor anxiety.

The Fear Factor: Why Markets Reacted So Strongly

Markets often thrive on stability — both political and geopolitical. The Pahalgam attack, which sparked outrage and concern across the country, triggered a rare show of unity in Parliament. An all-party meeting convened on Thursday saw leaders from across the political spectrum, including Congress’ Rahul Gandhi, extending full support to any stern action the government plans to take against the perpetrators.

While this political solidarity was applauded, investors had other concerns.

“The overhang of uncertainty — how India will respond, and what the regional consequences might be — has injected a wave of risk aversion in the market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “Investors are choosing caution over speculation.”

Adding to the cautious mood, India announced a temporary halt to the Indus Water Treaty discussions with Pakistan, reduced diplomatic engagements, and suspended visa issuance — developments that signal an escalation in diplomatic tensions.

Foreign Inflows Had Fueled Optimism — Until Now

This week had started on a high note. Indian equities were basking in the glow of renewed Foreign Institutional Investor (FII) interest and a global sigh of relief over the Trump administration’s decision to pause retaliatory tariffs on India and several other countries. The rollback of trade tensions had sparked a rally in global markets, with India being no exception.

That momentum, however, proved fragile in the face of terrorism and its unpredictable aftershocks.

Beyond the Dip: A Market in Tug-of-War

Experts suggest the current slump may be temporary — a knee-jerk reaction to geopolitical tensions — rather than a sign of fundamental weakness. “We’re seeing a market tug-of-war right now,” said market analyst Manoj Kumar Jain. “On one side, we have strong FII flows and economic stability; on the other, the looming shadow of uncertainty due to cross-border tensions.”

Sectors like defense, energy, and select infrastructure stocks could become focal points in the coming days, depending on how the situation unfolds.

What Should Investors Do?

For retail investors, this is a moment for level-headedness, not panic. Volatility is part and parcel of market dynamics, especially when geopolitical risks are in play. Experts recommend focusing on long-term fundamentals and avoiding reactionary moves.

The Bigger Picture

This market dip is a clear indication of how sensitive Indian investors remain to regional instability. The attack in Pahalgam has not only reopened old wounds but has also reinforced the intricate link between national security and economic confidence.

As the nation grieves and leaders deliberate, the markets wait — watching, reacting, and recalibrating with every new development.