Despite heightened geopolitical stress in the subcontinent, Indian stock markets managed to stay in the green on May 7, with benchmark indices edging higher after a volatile session. Investors seemed to take heart from global cues, easing trade concerns, and the recently signed Free Trade Agreement (FTA) with the United Kingdom.
The session opened on a shaky note as tensions escalated between India and Pakistan, but by midday, indices had recovered. Both the Nifty 50 and the Sensex reversed early losses with support from key sectors like auto, realty, and metals.
By close, the Nifty 50 was up 0.14%, reclaiming the 24,400 mark to end at 24,414. The Sensex added 105 points, or 0.13%, finishing the day at 80,746. Meanwhile, the broader market displayed a stronger rebound: the Nifty Midcap 100 and Nifty Smallcap indices closed with robust gains of 1.50%, undoing much of the previous session’s damage.
The market session unfolded just hours after India launched “Operation Sindoor” — a set of precision strikes on nine locations across Pakistani territory and Pakistan-administered Kashmir. The strikes, India claimed, were aimed at militant infrastructure believed to be responsible for the April 22 Pahalgam attack in which 26 Indian tourists lost their lives.
While the geopolitical backdrop remains fragile, overseas investors appear relatively undeterred. They have remained net buyers for 14 consecutive trading sessions, possibly betting on India's domestic growth story to buffer external shocks.
Some market watchers suggest that India’s macro fundamentals — such as stable inflation, improving manufacturing data, and consumption-led growth — are giving global investors reason to stay optimistic, despite the headlines.
Textile stocks were among the top gainers of the day, as sentiment improved following the formal signing of the India-UK Free Trade Agreement. The deal is seen as a potential game-changer for India's textile and garment exporters, who expect greater access to British markets and fewer tariff barriers.
Investors seemed to price in early optimism, sending shares of several textile firms sharply higher during the session.
The Nifty Auto index led sectoral gains with a 1.66% jump, powered by optimism around domestic demand and export potential. Realty, metal, and PSU bank stocks also showed strength, posting gains between 0.29% and 1.12%.
However, not all sectors fared well. Fast-moving consumer goods (FMCG) stocks underperformed, with the Nifty FMCG index slipping 0.52%. This could reflect concerns around rural demand or input cost pressures — though nothing appears conclusive at this point.
The mood in the markets remains cautiously upbeat. While tensions along the border have added a fresh layer of uncertainty, investors are seemingly choosing to focus on fundamentals and external positives like trade deals and capital inflows.
Still, with geopolitical developments unfolding rapidly, market sentiment may remain fragile. For now, though, the bulls have managed to hold the line. Whether this resilience sustains will depend on how both diplomatic and macroeconomic narratives evolve in the coming days
(By arrangement with livemint.com)
