The Indian stock market witnessed a bloodbath on Friday, April 25, 2025, as rising geopolitical tensions between India and Pakistan triggered an intense sell-off across the equity space. The sharp fall came as a reaction to escalated border tension following the Jammu & Kashmir terror attack and subsequent diplomatic fallout.

Within just the first two hours of trade, the combined market capitalisation of all BSE-listed companies plunged by over ₹10 lakh crore, highlighting the intensity of investor panic and sell-side pressure across large, mid, and smallcap stocks.

Sensex and Nifty Nosedive

The benchmark indices opened lower and quickly extended losses. As of mid-day:

• The Nifty 50 dropped by over 300 points,

• The Sensex tumbled 870 points,

• The Nifty Midcap index plunged by nearly 1,600 points,

• The Smallcap index was down over 3%.

This broad-based decline reflects a loss of investor confidence, primarily driven by the uncertainty surrounding India’s political and security environment.

Sectoral Sell-Off: IT Alone in Green

Out of all the sectoral indices on the National Stock Exchange:

• Only the Nifty IT index traded in the green.

• The Nifty Media and Nifty Realty indices saw the steepest declines, both down more than 3%.

• The PSU Bank index, Nifty Energy, Pharma, Metal, and Auto indices also fell between 2% and 3%.

This indicates that the correction was widespread, with most market participants pulling out their money across sectors, barring technology which often acts as a defensive play during global volatility.

Top Contributors to the Fall

Among individual stocks, some of the biggest contributors to the Nifty’s fall included:

• Axis Bank, which alone contributed 38 points to the index’s decline,

• State Bank of India (SBI), contributing 22 points,

• Bharti Airtel, Larsen & Toubro (L&T), and Bajaj Finance, each adding 17-20 points to the downside.

This list indicates that even blue-chip and heavy-weight counters weren't spared during the panic sell-off, dragging down the index significantly.

Expert Views and Market Sentiment

Rahul Arora of Nirmal Bang stated that the recent seven-day rally seen on the Nifty prior to Thursday and Friday's decline was “the best time to sell,” as he expects further earnings downgrades moving forward. This comment adds further pressure on investor expectations and future earnings visibility.

Meanwhile, Vikash Jain of CLSA wrote in a market note that:

“Uncertainty on global trade is bringing back a TINA (There Is No Alternative) feeling among global investors towards the Indian market due to its low exposure to global trade. But the recent rally has taken both the Indian equity and bond markets back to stretched valuations.”

His statement subtly highlights that valuation concerns were already brewing, and geopolitical volatility only amplified the correction.

Global vs Indian Market Performance

Interestingly, while Indian markets were under intense pressure:

• Asian markets were outperforming,

• US futures, following three straight days of gains, were trading slightly positive, led by technology shares.

This contrast highlights how localised political risks in India led to an outsized reaction in its equity markets, unlike global peers who seem relatively insulated from the current regional flare-up.

What’s Causing the Panic?

The current crisis began with a terrorist attack in Jammu & Kashmir’s Pahalgam region, after which India took tough diplomatic actions including the suspension of the Indus Water Treaty with Pakistan. In retaliation, Pakistan closed its airspace to Indian commercial carriers, which had a direct operational and financial impact on Indian airlines, most notably IndiGo.

These actions have created uncertainty in the geopolitical landscape, with investors fearing potential escalation, trade disruption, and impact on India’s macroeconomic outlook.

Impact on Investors and Traders

The sell-off, combined with the large wipeout of wealth, has led to:

• Sharp intraday losses for short-term traders,

• Portfolio value erosion for long-term investors,

• Rising volatility across equity derivatives, especially in sectors sensitive to currency, global trade, and interest rates.

Retail investors, many of whom had increased their exposure during the recent rally, are now left scrambling to manage risk, while institutional investors are seen rebalancing their exposure to safe haven assets.

Technical Indicators and Support Levels

Market technicians suggest that:

• The Nifty has broken key short-term support levels, and

• The next support zone is seen around 21,500, with resistance at 22,200, if any recovery occurs.

Momentum indicators such as RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) also point to further downside risk unless geopolitical clarity emerges.

Midcap and Smallcap Carnage

Midcap and smallcap segments, which were the favourites of retail investors, have borne the brunt of the selling pressure. Many stocks in these segments are down between 5% to 10%, and this pain may persist if sentiment remains fragile.

The Midcap index falling 1,600 points is a sharp reminder that liquidity-driven rallies can unwind quickly under pressure.

Investor Takeaway: Risk Management Is Crucial

Given the current landscape, investors should tread with caution. While valuation concerns, earnings risks, and macroeconomic stress have been known for a while, geopolitical risks now add an unpredictable new layer to the investing environment.

Diversification, cash preservation, and sectoral rebalancing are key strategies to consider. Avoiding highly volatile smallcaps and booking profits in overbought sectors may also help protect capital.

Conclusion

Friday, April 25, 2025, will go down as one of the most volatile sessions in the Indian equity market in recent memory. A combination of geopolitical tension, valuation fatigue, and earnings uncertainty has resulted in a ₹10 lakh crore erosion in investor wealth, deep cuts across indices, and a sobering reminder that risk never disappears—it merely shifts shape.

As the India-Pakistan situation continues to unfold, investors are advised to remain vigilant, track global cues, and follow disciplined investment strategies. If tensions ease, a bounce back may emerge, but until then, defensive posturing and caution remain the need of the hour.

The Upcoming IPOs in this week and coming weeks are Ather Energy, Iware Supplychain Services, Arunaya Organics.

The Current active IPO are Tankup Engineers.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.