After a positive opening on the back of a rise in global crude oil prices, key Indian equity indices took a sharp fall around 12:30 p.m. on Thursday, after the army said it had conducted surgical strikes on terror camps across the Line of Control in Jammu and Kashmir, inflicting "significant casualties".
A roller-coaster ride thereafter also saw some indices recovering, albeit marginally, but only to fall again and close significantly lower. The market movement was similar in Pakistan.
The barometer 30-scrip sensitive index (Sensex) of the BSE opened strong at 28,423.14 points on Thursday, against the previous close at 28,292.81 points. By the time the news briefing by the Indian Army had ended, the intra-day fall was as much as 750 points.
After a subsequent volatile session, where some investors were also resorting to value buying amid overall concern over escalation in tension between India and Pakistan, the key index ended with a loss of 465.28 points, or a 1.64 per cent drop, at 27,827.53 points.
But for Tata Consultancy Services, all the 30 Sensex shares ended in the red.
"As markets got first whiff of developments across the border, panic liquidation gripped the stocks enmasse resulting in a sell off across board. However F&O expiry dynamics ensured that liquidation spree did not evolve into a free fall," said Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services.
At the Karachi Stock Exchange, the movement for KSE-30 was similar. The index, at one point of time, was down over 415 points. But half hour before the closing bell, it was ruling with a loss of 20.31 points, or 0.09 per cent.
India's National Stock Exchange (NSE) closed lower by 153.90 points, or 1.76 per cent, to 8,591.25 points.
The market mood took a beating as soon as the briefing by the Indian Army started.
"India cannot allow terrorists to operate across the LoC (Line of Control) and strike with impunity," Director General of Military Operations Lt Gen Ranbir Singh told a hurriedly called press briefing in New Delhi, soon after a meeting of the Cabinet Committee on Security.
"The strikes were carried out based on specific and credible information," he said.