Markets See Red as Indo-Pak Tensions Continue to Rise

The setup indicates continuation of the downside pressure, unless tensions abate

- Ram Sahgal

Benchmark indices closed in the red for the second straight session on Friday amid fears of India and Pakistan escalating tensions. While both Nifty and Sensex recovered from their intraday lows, anticipation of tensions over the weekend led foreign portfolio investors (FPIs) to press the sell button in both the cash and derivatives segment.

The setup by the end of the day indicates continuation of the downside pressure, unless tensions abate. Selling in heavyweights such as ICICI Bank, HDFC Bank and Reliance Industries dragged both Nifty and Sensex down by 1.1% each. Nifty closed down by 266 points at 24,008, slightly below its 200-day moving average of 24,044.25, a bearish sign. The Sensex, which settled 880 points lower at 79,454.47, managed to close slightly above its 200 DMA of 79,114, per Bloomberg data.

FPIs' changed stance in cash markets on Friday—they sold shares worth a provisional ₹3,798.71 crore—came after sixteen straight sessions of net buying ₹16,473 crore. FPIs also sold index and stock futures worth a net ₹4,346 crore amid escalating tensions, BSE and National Stock Exchange (NSE) data showed. The sale of index futures on Friday once again made them cumulatively net short after two days.