Markets slide as geopolitical tensions and weak earnings weigh on sentiments

Indian equity markets dropped sharply on Friday, 25 April, extending losses for a second consecutive session, as a mix of rising geopolitical tensions and underwhelming corporate earnings dented investor confidence.

Both the Sensex and the Nifty declined over 1 per cent by the afternoon session, reversing early gains and witnessing broad-based sectoral declines.

The trading day began on a positive note, with the 30-share BSE Sensex rising by 329.23 points to touch 80,130.66 and the NSE Nifty climbing 118.75 points to 24,365.45 in early deals.

The upbeat opening was supported by continued foreign institutional investments and a buoyant global market backdrop. However, sentiment quickly soured as selling pressure intensified across key sectors, particularly banking and financials.

By mid-session, the Sensex had fallen sharply, down 1,195.62 points or 1.5 per cent at 78,605.81, while the Nifty dropped 398.85 points or 1.64 per cent to 23,847.85. Major laggards included Axis Bank, Adani Enterprises, Adani Ports and SEZ, Jio Financial Services, and Trent, with intra-day losses of up to 6 per cent.

The downturn in the markets was largely attributed to growing concerns over the exchange of fire along the India–Pakistan Line of Control (LoC).

The existing geopolitical unease over the Russia-Ukraine war and Trump tariffs has been further heightened in the wake of the terror attack in Pahalgam, Kashmir, on 22 April, which claimed 26 lives, most of them tourists.

Speculation surrounding New Delhi’s suspension of the Indus Water Treaty — which Pakistan said it would read as an Act of War — and the scaling down of diplomatic ties on both sides had already fuelled uncertainty in the region.

Adding to the bearish mood were lacklustre fourth-quarter earnings, which have failed to inspire confidence in the broader market outlook. Preliminary analyses suggest that earnings growth for the March quarter has slowed, with operating profits showing only modest expansion.

According to data put out by Moneycontrol for 111 non-financial and non-energy companies, operating profit rose just 6 per cent year-on-year — the weakest pace in five quarters and part of an ongoing trend of subdued performance.

The correction also appears to be driven in part by profit-taking, as investors moved to lock in gains after a strong rally in recent sessions. Thursday (24 April) had marked the end of a seven-day winning streak, and Friday’s decline may reflect a broader reassessment of valuations amid the evolving macroeconomic and geopolitical landscape.

Banking stocks were among the most heavily impacted, with the Nifty Bank index shedding nearly 1.6 per cent. Shares of Axis Bank fell over 3.5 per cent after the lender reported a slight year-on-year dip in quarterly net profit to Rs 7,117 crore. Out of the 12 Nifty Bank constituents, 11 were in negative territory, with IndusInd Bank being the only gainer, trading marginally higher.

As the week draws to a close, market participants remain focused on geopolitical developments and upcoming earnings releases, both of which are likely to influence sentiment in the near term.