Escalating tensions between India and Pakistan have led to a sharp downturn in Indian financial markets and disrupted travel and tourism sectors. On May 9, 2025, the BSE Sensex dropped over 900 points to around 79,382, while the NSE Nifty 50 fell below 24,000, marking a decline of approximately 1%. Market volatility surged, with the India VIX rising over 10% to a one-month high of 21.63. Defence stocks saw notable gains, with shares of companies such as Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Bharat Dynamics Limited, Paras Defence, and Zen Technologies rising between 2% and 14%, driven by expectations of increased defence orders amid the conflict. Drone manufacturers also experienced rallies up to 17%. Conversely, sectors including airlines, tourism, hotels, and real estate faced sharp selloffs, with stocks like Make My Trip falling about 10%, InterGlobe Aviation down 4%, and SpiceJet declining 3.7%. The Indian rupee weakened, erasing its 2025 gains and dropping 1.04% to 85.79 against the US dollar, with options volume surging post-conflict flare-up. In response to the geopolitical situation, Indian travel firms including EaseMyTrip, Ixigo, and Cox & Kings suspended bookings and tours to Turkey, Azerbaijan, and China, citing their perceived support for Pakistan. This move has led to cancellations and revenue impacts for these companies. The conflict intensified following missile strikes by Pakistan in Jammu and Kashmir, prompting India to launch precision strikes, referred to as 'Operation Sindoor'. Analysts note that while markets have reacted negatively in the short term, historical trends suggest potential medium to long-term recovery post-conflict. Investors are advised to monitor key support levels and sector-specific developments as the situation evolves.