Rupee Tumbles, Sensex Plunges 3% as India Reports Pakistan-Origin Drone Strike Near Border
The Indian rupee opened at a historic low of 86.50 against the U.S. dollar, while the Sensex plummeted 3% in early trading after India’s Defense Ministry confirmed a Pakistan-origin armed drone breached airspace near Jammu, sparking fears of escalating cross-border tensions. The drone, carrying advanced missile technology, was intercepted 20 km from the Line of Control (LoC), marking the third such incident this month.
Investors fled equities for safe-haven assets, wiping ₹12 trillion (145 billion) from Indian markets. “This isn’t just a security crisis—it’s a liquidity nightmare,” said Axis Bank Chief Economist Neha Gupta, noting that foreign portfolio investors (FPIs) pulled ₹8,200 crore 1 billion) from Indian debt markets overnight.
Market Fallout:
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Currency: Rupee fell 1.8% vs USD, steepest drop since 2022 as India-Pakistan tensions spook investors.
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Sectors Hit: Defense stocks soared (Bharat Dynamics +14%) on military bets; Tata Motors (-7%), Infosys (-4%) sank on supply chain fears.
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Global Reaction: Brent crude jumped 2.3% to $115/barrel; Asian demand for U.S. Treasuries pushed yields to 3.4%.
