The resilience of the Indian stock market is once again on display. On a day when India launched Operation Sindoor – an attack on nine terrorist sites in Pakistan and Pakistan-occupied Kashmir – Dalal Street managed to end the day with marginal gains.
In the past too, during times of heightened tensions between India and Pakistan, the Indian markets have often shown resilience.
Data collated by Anand Rathi shows that the average Sensex correction at lowest points during Indo-Pak tensions was 7.5%. The report outlines the market reaction to various episodes when tension between the two countries escalated.
In 2019, after the Pulwama terrorist attack, the Sensex fell 1.9% between February 14 and March 1.
In 2016, following the Uri terrorist attack and India’s surgical strikes in Pakistan, the stock market dropped 2.7% between September 18 and 26.
During the 26/11 Mumbai terror attacks in 2008, the Sensex rose 0.5% between 26th November and 31st December.
Following the attack on the Indian Parliament in 2001, markets reacted sharply. Between 13th December 2001 and 1st October 2002, the Sensex crashed over 13%. During the Kargil War in 1999, the markets climbed 1.6% between 3rd May and 26th July.
The report says and I quote, "While short-term volatility is always a possibility, we do not expect a structural impact on Indian equities. The broader market narrative continues to be shaped by India's domestic macro strength, and not by its external fault lines. Unquote.
It adds, that even if the current situation becomes war-like, the brokerage does not expect the Nifty to correct beyond 5 to 10%.
