The set up by the end of the day indicates continuation of the downside pressure, unless tensions abate.

Selling in heavyweights such as ICICI Bank, HDFC Bank and Reliance Industries dragged both Nifty and Sensex down by 1.1% each. Nifty closed down by 266 points at 24,008, slightly below its 200-day moving average of 24,044.25, a bearish sign. The Sensex, which settled 880 points lower at 79,454.47 managed to close slightly above its 200 DMA of 79,114, per Bloomberg data.

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FPIs’ changed stance in cash markets on Friday — they sold shares worth a provisional ₹3,798.71 crore — came after sixteen straight sessions of net buying ₹16,473 crore.

FPIs also sold index and stock futures worth a net ₹4,346 crore amid escalating tensions in the subcontinent, BSE and NSE data show. The sale of index futures on Friday , once again made them cumulatively net short after two days.

Their cumulative net short index futures positions stood at 7,420 contracts against Thursday’s net long figure of 7,464 contracts.

Until Thursday, FPIs activity remained relatively unperturbed by the geopolitical tensions. But Friday’s activity marks a change in their stance. Their selling on the day shows them to be adopting a cautious stand in light of the rapidly changing situation.

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While DIIs net purchased cash shares worth ₹7,278 crore, selling by FPIs and retail and high networth investors, whose figures weren’t released until press time, dragged down the markets, per analysts.

However, the Nifty managed to close above the psychological 24,000 level, recovering 0.3% from the day’s low of 23,936. The Sensex staged a sharper 0.6% recovery from the day low of 78,968.34. But anticipation of escalation over the weekend muted overall investor sentiment.

To be sure , the Nifty Midcap 150 staged a much sharper recovery than the benchmarks ending 0.2% higher at 19,596.25, led by Yes Bank, which surged almost 10% on the back of Japanese lender Sumitomo Mitsui acquiring 20% from its shareholders, and defence stocks such as Bharat Dynamics Ltd, Bharat Forge, Mazagon Dock and Cochin Shipyard, which rose 3-6% amid the Indo-Pak tensions. The recovery from the day’s low of the Midcap 150 index was a staggering 2.2%.

Indeed on 7 May, when the tensions escalated with India striking Pakistan and PoK, FPIs not only net purchased shares worth ₹2,914 crore, but also turned net buyers of index futures for the first time in seven months, net purchasing contracts worth ₹469 crore, showed NSDL and NSE data.

On 8 May, they net purchased ₹2,361 crore worth of shares and ₹1,339 crore despite Pakistani drone attacks on the intervening night of 7-8 May.

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“FPIs until now appeared to be unperturbed by the rising geopolitical tensions in the subcontinent as evinced by their futures positioning,” said Sriram Velayudhan, senior vice president, IIFL Capital Services. “We will have to see their actions in the upcoming sessions before arriving at any conclusion.”

Rajesh Palviya , derivatives head of Axis Securities, believes that recent FPI activity despite the breakout of hostilities indicate that a de-escalation was likely. However, until that happens, he expects the markets to remain under pressure.

Indeed, Nifty derivatives indicate a range of 4% for Monday between 23,550 and 24,450 for Monday with a bias on the downside.

“All in all the benchmark index would react to news flows, but for now the bias is on the downside,” agreed Velayudhan. He added that the sharp recovery in the Nifty Midcap 150 index was attributable to buying by domestic investors at lower levels.

After Friday’s market action investors were left poorer by ₹2 trillion , indicated BSE data. The market breadth remained negative with five stocks declining for three that declined on NSE.