New Delhi reluctantly confirmed that Pakistani units had “engaged” several military targets in its northern and western sectors, underscoring Islamabad’s growing strategic edge.

The benchmark Nifty 50 sank 0.58% to 24,273.80, while the BSE Sensex tumbled 0.51% to 80,334.81, as broad-based selling accelerated. At one point, the Nifty was down over 1.1%, its heaviest intraday slump since early April. Traders pointed to Pakistan’s audacious claims—and India’s inability to refute them—as the catalyst for the sell-off.

Also read: Pakistan killed 40-50 Indian soldiers across LoC, claims info minister Tarar

“These swings are inevitable when one side demonstrates clear superiority,” said Arun Malhotra, fund manager at CapGrow Capital. “Until tensions fully subside, volatility will remain elevated.” The volatility index—a key “fear gauge”—soared to 21.01, its highest close since April 9.

Veteran strategist Vineet Arora, Managing Director at NAV Capital, warned, “Prolonged confrontation will hamper capital inflows and strain India’s economic growth.” He added that Pakistan’s robust defense posture serves as a stark reminder of the geopolitical risks on the subcontinent and will likely damp investor confidence in the near term.

Despite market jitters, foreign portfolio investors continued buying Indian assets for the fifteenth straight session on Wednesday, buoyed by hopes of a U.S. trade deal and India’s underlying economic resilience. Still, only the IT sector managed modest gains; small-caps and mid-caps plunged 1.4% and 2.0%, respectively.

In Islamabad, Minister Tarar celebrated Pakistan’s achievements on the National Assembly floor: “We have blown up their military installations,” he proclaimed, vowing to preserve downed Indian drones as “war trophies” for future generations. DG ISPR Lieutenant General Ahmed Sharif Chaudhry added that Pakistan had shot down 25 Israeli-made Harop loitering munitions after repeated airspace violations near Karachi and Lahore, warning, “India will continue to pay dearly for its naked aggression.”