Indian benchmarks retreat as Kashmir attack fuels geopolitical concerns

India's benchmark indexes reversed early gains on Friday, weighed down by broad-based sector losses and geopolitical jitters after a deadly militant attack in Kashmir raised tensions with Pakistan.

The Nifty 50 (.NSEI), fell 0.73% at 24,069.2 and the BSE Sensex (.BSESN), lost 0.67% to 79,299.65 as of 9:57 a.m. IST.

Both the benchmarks rose about 0.4% each in early trade before swinging to losses.

All the 13 major sectors declined. The broader, more domestically-focussed small-caps (.NIFSMCP100), and mid-caps (.NIFMDCP100), lost 2.6% and 2%, respectively.

Both benchmarks snapped a seven-session winning streak on Thursday as investors turned risk-averse after an attack on tourists in Kashmir killed 26 men and heightened geopolitical tensions.

"With the peak quarterly results season kicking in, we expect the momentum in markets to rotate across sectors, keeping traders and investors actively engaged," said Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research.

However, signs of escalating tensions between India and Pakistan after this week's Pahalgam attack which killed 26 civilians, could cap market gains and keep investors on edge, analysts said, noting India's move to downgrade diplomatic ties and suspend the Indus water treaty.

Oil-to-telecom conglomerate Reliance Industries (RELI.NS), gained 1.5% while car maker Maruti Suzuki (MRTI.NS), added 1% ahead of reporting their March quarter results later in the day.

Private lender Axis Bank (AXBK.NS), lost 3.7% after reporting their quarterly results on Thursday. Morgan Stanley said that Axis Bank could face near-term pressure as the bank indicated that it may take a few quarters for asset quality to improve.

In contrast to domestic equities, the MSCI Asia ex-Japan index (.MIAPJ0000PUS), advanced 1.1%. Overnight, Wall Street equities rose after Trump said trade talks between the world's top two economies were underway, pushing back against contradicting Chinese claims.