By India’s markets plunged into chaos after security forces downed a Pakistani drone armed with Turkish precision missiles near the Punjab border—an audacious provocation inflaming already volatile cross-border relations. The rupee crashed through the 86.50 barrier against the USD, its weakest level since the 2013 ‘taper tantrum’ crisis, while panic-driven selling catapulted 10-year sovereign bond yields 25 basis points higher to 8.1%—a gut punch to New Delhi’s borrowing costs and investor confidence.
Prime Minister Modi convened an emergency meeting of the Cabinet Committee on Security (CCS), vowing “swift retaliation.” Analysts warn of capital controls if FPIs continue their ₹10,500 crore ($1.3 billion) exodus. “Markets are pricing in a protracted conflict,” said ICICI Securities strategist Rajiv Mehta.
Sectoral Impact:
- Defense Surge: HAL shares soared 12% on rumors of a $3B drone defense contract.
- Aviation Hit: IndiGo canceled 40 flights due to airspace restrictions, shares down 6%.
- Agriculture Risk: Wheat futures jumped 5% as Punjab farmers halted harvests near border zones.