This is not just a pullback—it’s a window for strategic positioning
Investor mood seems careful and leaning toward caution. This stems from recent military actions under “Operation Sindoor,” an Indian operation launched after the tragic Pahalgam terror attack that took the lives of 26 civilians. The offensive targeted several terror launchpads in Pakistan-occupied Kashmir.
While markets saw a broad sell-off as they opened, equities have steadied somewhat by mid-session. It appears traders are holding back to see how the risks of escalation and global reactions unfold.
Sectoral Performance
Defensive Sectors Lead
Geopolitical tensions push defensive sectors into the spotlight. Reflecting this trend, the FMCG, Pharma, and IT sectors are standing strong today.
The Nifty FMCG index shows little movement with a slight upward trend, as a steady demand outlook supports it. Investors seem to choose low-risk sectors.
Pharmaceutical stocks, including key players like Sun Pharma and Dr. Reddy’s, see small gains. Many expect medical exports to continue without issues, even with disruptions in nearby regions.
Information Technology stocks show some stability despite a lackluster performance. The Nifty IT index drops 0.3%, faring better than broader market declines that exceed 0.5%.
Weak Performers – Banking and Metals Stocks
The Bank Nifty drops more than 1.2% as public sector banks and some private lenders pull it down. Higher bond yields and worries about how geopolitical tensions might affect foreign fund inflows hurt financial sentiment.
The Nifty Metal index tumbles close to 2%. Falling global base metal prices and fears of lower demand if international tensions rise put pressure on the index.
Heavyweights like Tata Steel, JSW Steel, and Hindalco take major hits, showing how risk-averse the mood is in the commodities market.
Top Gainers and Losers (Midday Snapshot)
Top Gainers on Nifty 50
Sun Pharma – Gains over 2.3% amid positive outlook for export-driven pharma firms.
Nestle India – Up 1.8%, benefiting from defensive buying and recent price hikes in packaged goods.
HCL Technologies – Up 1.5%, after winning a large U.S. healthcare contract, according to industry reports.
Divi’s Laboratories – Advances 1.2% as investors rotate into healthcare names.
Britannia Industries – Up 1%, riding on sustained rural demand and input cost stability.
Top Losers on Nifty 50
Tata Steel – Down 3.9% amid weak metal cues and China’s sluggish recovery signals.
SBI – Declines 2.5%, impacted by heavy FII outflows and risk aversion in financials.
HDFC Bank – Drops 2.1% as bond yields inch higher and loan growth estimates are revised downward.
JSW Steel – Down 2%, following a downgrade by a domestic brokerage on valuation concerns.
Adani Ports Sheds 1.8%, reacting to logistics and trade risks under the current geopolitical climate.
Broader Market Trends
The broader market indices are also underperforming, with the Nifty Midcap 100 down 0.75% and the Nifty Smallcap 100 lower by 0.65%. Volatility remains elevated, as evidenced by the India VIX, which is up nearly 8% intraday, signaling heightened nervousness and hedging activity across traders.
Advance-decline ratios continue to favor declines, with approximately 33 stocks in the Nifty 50 trading in the red at midday, indicating broader weakness across sectors.
Institutional Activity
Foreign Institutional Investors (FIIs) are seen pulling out capital, reflecting a broader flight to safety seen globally. Provisional data from market desks indicates net selling of nearly ₹1,000 crores in the cash segment so far today. Domestic Institutional Investors (DIIs), on the other hand, are providing some support, particularly in large-cap defensives and infrastructure-linked names.
Corporate Earnings: Mixed Signals
The earnings season continues to be a key driver of individual stock moves.
Larsen & Toubro (L&T) reported better-than-expected earnings last evening. Despite the market’s cautious tone, the stock is trading flat, supported by its strong order book and upbeat guidance.
Tata Consumer Products is seeing mild pressure after missing revenue expectations, even though profit margins improved sequentially.
ICICI Prudential Life and Marico are set to report earnings later today. Early positioning indicates bullish sentiment on Marico due to softening input costs.
Macroeconomic Updates
From a macroeconomic lens, investors remain attentive to cues from global central banks and domestic economic indicators.
Crude oil prices are trending higher amid Middle East instability, trading near $90 per barrel, putting upward pressure on India’s import bill and potentially nudging inflation expectations higher.
The Indian rupee is trading at 83.45 against the US dollar, showing mild depreciation as safe-haven demand lifts the greenback.
Bond yields are also moving up, with the 10-year Indian government bond yield rising to 7.22%, reflecting inflation concerns and shifting rate cut expectations.
Expert Commentary
Market strategists suggest that the geopolitical flare-up, though temporarily unsettling, may not derail the long-term bullish structure of the Indian market. The resilience of large-caps and sustained DII inflows continues to provide a floor. However, the near-term direction will likely depend on the extent of any further escalation and clarity on global risk appetite.
Some analysts also point out that the dip offers selective buying opportunities in structural growth stories, especially within infrastructure, consumption, and healthcare themes. However, caution remains the dominant mood until geopolitical tensions ease.
Outlook
With U.S. futures trending flat and European markets expected to open lower, sentiment is unlikely to rebound sharply in the second half of today’s session. Traders may continue to unwind leveraged positions ahead of key earnings and RBI commentary due later in the week.
A close below 24,200 on the Nifty 50 could open room for further correction toward the 23,950–24,000 support zone. On the upside, any bounce back is expected to face resistance near 24,450–24,500, unless geopolitical nerves settle down.
As of midday on May 7, 2025, the Indian stock market trades under pressure due to rising geopolitical concerns, sectoral underperformance in banks and metals, and mixed quarterly earnings. While defensive sectors offer a cushion, overall sentiment remains fragile. The rest of the trading day hinges on global cues, institutional activity, and further developments on the military front. Investors and traders are advised to tread cautiously amid elevated volatility and event-driven risk.
