Sensex, Nifty Prediction On Friday, May 9: How Will Stock Market React To Indo-PAK War, US-UK Trade Deal?

Indian stock market is likely to be impacted by the growing escalation between India and Pakistan war on Friday, May 9. Both countries have shown various locations with drones and missiles in a tit-for-tat. Cities like Amritsar, Jammu & Kashmir, and Rajasthan had to keep a blackout since May 8th, as Pakistan sent rockets their way.

Domestic equities will also react to the volatility index, India Vix, which climbed 10 to 21.01, marking its highest level since April 9. Further, volatility could be expected after weekly index expiry on May 8th.

Sensex, Nifty:

After recording a volatile session, Sensex and Nifty faced sharp selling pressure during the closing bell. Sensex ended at 80,334.81, down by 411.97 points or 0.51%, while Nifty closed at 24,273.80 lower by 140.60 points or 0.6%. Bank Nifty slipped by 245 points.

Weak investor sentiment was evident in market breadth, with 2,497 stocks declining and only 1,256 advancing on the BSE. Losses were broad-based, led by pressure in metal, oil & gas, pharma, PSU banks, auto, consumer durables, and realty stocks - each falling between 1-2 per cent. IT and Media were the only sectors to end in the green. The broader markets also hit, with the BSE Midcap index falling 1.9 per cent and the Smallcap index down by 1 per cent. Meanwhile, the Indian rupee weakened sharply, ending 88 paise lower at 85.71 against the US dollar - reflecting risk-off sentiment amid geopolitical uncertainty, highlighted Vikram Kasat, Head - Advisory, PL Capital.

Stock Market Outlook On May 9:

During the Nifty weekly index expiry, Nifty May Futures dropped over 1% to 24,207.

Also, in the early trade, Gift Nifty nosedived by as much as 295 points to trade at 23,976, signalling a bearish opening for Sensex and Nifty.

Meanwhile, the market will be influenced by global cues. Overnight, the US stock market climbed by 0.6% to over 1% with Nasdaq outperforming Dow Jones and S&P 500. Dow Jones climbed 254.48 points or 0.62% to close at 41,368.45, while S&P 500 index ended at 5,663.94, up by 32.66 points, or 0.58%. Tech-heavy index Nasdaq Composite jumped by 189.98 points, or 1.07% to finish at 17,928.14. However, Asian market traded mixed.

"Heightened border tensions and weak global cues dragged down markets and the rupee. Investors are advised to stay cautious, avoid aggressive positions, and focus on fundamentally strong stocks with limited near-term exposure to geopolitical risks. Defensive sectors and quality large caps may offer better stability in the current environment," said Kasat.

Expert believes global market remains stable and positive. Vinod Nair, Head of Research, Geojit Investments said, "the global market remains stable and positive, buoyed by expectations of an imminent U.S. trade deal with the UK and preliminary indications of trade talks with China. Historically, the domestic volatility is expected to neutralize as cross border issue de-escalates."

To the May 8th performance, Nair highlighted Indian equity market experienced profit booking by the end of the trading day due to escalating tensions between India and Pakistan, marked by increased cross-border exchanges. The FOMC policy meeting provided little reassurance, as the FED expressed concerns that aggressive U.S. tariffs could fuel inflation and raise unemployment.

Furthermore, Ajit Mishra - SVP, Research, Religare Broking said, ongoing uncertainty continues to make traders cautious, potentially clouding the prevailing trend amid lingering geopolitical tensions. Until the volatility, as indicated by the elevated India VIX, subsides, we recommend maintaining a hedged strategy to navigate the current environment, with focus on stock selection.

Adding further, Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services said, volatility spiked, with India VIX rising 10.2% to a one-month high of 21.01, reflecting investor nervousness amid ongoing geopolitical developments. On the global front, Fed Chair Jerome Powell highlighted growing risks of both higher unemployment and persistent inflation & left interest rates unchanged at 4.25-4.5% adding to overall cautiousness. Meanwhile, US President Donald Trump's scheduled announcement of a trade deal with a large country later today, provided some hopes of headway in the ongoing trade negotiations. Foreign Institutional Investors (FIIs) were net buyers for the fourth consecutive session, with a month-to-date inflow of ₹9,648 crore - providing support amid regional uncertainties. Looking ahead, market volatility is expected to persist as investors track further developments on the India-Pakistan front and US trade announcements.

Also, Donald Trump, the 47th US President, and Keir Starmer, the Prime Minister of the United Kingdom, have announced a breakthrough trade deal for driving the two countries' economies. As part of the US-UK trade deal, automobile, pharmaceutical, and aviation leaders like Boeing and steel & aluminum received a major boost with the revision in tariffs. The US gets access to a new market in the UK that is going to boost revenue. Both US and UK have reduced their tariffs on imported products from each other.

In this regard, Dr. Vivek Tandon, Founder - revalyu Group said, the India-UK Free Trade Agreement (FTA) will allow Indian companies to boost their exports to the U.K. by making its products more cost effective. It will help the textile exporters strengthen market access in the UK by building a cost-effective and resilient supply chain. India's export of textile-based products grew at a rate of approximately 7% from April to December 2024, compared to the same period in 2023. The likely UK market share growth thanks to the FTA will further boost India's textile exports.

Moreover, the analyst said, as the UK is one of the largest importers of apparel, the FTA paves the way for deeper trade ties with UK buyers. The FTA will enable us to be even more competitive, accelerate our export growth and open up new areas of sales by further reducing the net cost of products exported."

To investors, Prashanth Tapse, Senior VP (Research), Mehta Equities said, with the local currency depreciating sharply amid the ongoing stand-off, foreign investors could flee domestic equities to park their funds in overseas safe-haven assets.

On the technical front, Satish Chandra Aluri, Lemonn Markets Desk said, Nifty 50 had a weak close as the benchmark slipped below 24200 levels in the last minutes of trading, although it closed at 24273. On the upside, expect 24400 to continue to act as an immediate resistance zone while 24200 acts as immediate support on the downside.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.