Indian markets slump after LoC violation by IAF

MUMBAI: Indian markets dived on Tuesday after the country’s military aircraft violated the Line of Control (LoC), escalating tensions between the two nuclear-armed neighbours.

Pakistan’s military confirmed that Indian jets crossed into its territory and released a payload after Pakistan scrambled its own jets, but there was no casualties or damage.

Indian Air Force (IAF) aircraft in the wee hours of Tuesday intruded the LoC near Muzaffarabad sector, however they scrambled back following timely response from the Pakistan Air Force, the Pakistani armed forces’ media wing said.

The broader NSE Nifty was 0.86 percent lower at 10,787 as of 0510 GMT, while the benchmark BSE Sensex fell 0.88 percent to 35,894.36.

“Markets are reacting to the tension on the border. These situations make markets nervous,” said Deven Choksey, founder and director of KR Choksey Investment Managers.

“Expiry due on Thursday is also adding to the volatility,” Choksey added.

Most shares traded in the red with both the indexes declining more than 1 percent minutes after markets opened.

Index heavyweights on the NSE took a beating, with Reliance Industries and Housing Development Finance Corp declining as much as over 2 percent.

“Geopolitical tensions have been running high. So, any news flow is likely to spook the markets,” said Naveen Kulkarni, head of research, Reliance Securities.

Among the decliners, Dewan Housing Finance fell over 8 percent, a day after ratings agency ICRA downgraded its rating on Dewan’s commercial paper.

Meanwhile, the Indian rupee fell to 71.1375 to the dollar from Monday’s close of 70.9850. Indian bonds opened slightly late after a technical glitch on the trading and clearing platform. The 10-year benchmark bond yield rose to 7.5856 percent compared with 7.5839 percent on Monday.

“People don’t want to run position during such uncertain times,” said a dealer at a foreign bank.