Operation Sindoor: Markets Resilient Amid Escalating Tensions, Know How D-Street Has Performed During Previous Conflicts

Stock Market News: India successfully conducted strikes on terrorist sites in Pakistan and Pakistan-occupied Kashmir as a part of Operation Sindoor. Following the attack, D-Street has remained calm, with headline indices trading rangebound around flat levels. The 30-Share Sensex traded at 80,746.78 levels up by 105.71 points or 0.13 per cent. On the other hand, the Nifty 50 traded at 24,414.4 levels up by 34.8 points or 0.14 per cent.

Impact of India Pakistan Conflict On Markets

D-Street has typically responded to Indo-Pak conflicts negatively since 1999. On average the Sensex and the Nifty have declined 6.31 per cent and 5.57 per cent respectively during times of conflict as can be seen in the tables below.

On the other hand data from the BSE and the NSE shows that the headline indices have managed to turnaround and make a dramatic recovery from the lows hit during times of conflict in a period of just six months after the conflict began. On an average the Sensex and the Nifty have managed to rebound 17.52 per cent and 18.27 per cent respectively from the lows they hit during times of conflict in six months. Here’s a look at how D-Street has fared during the past five instances of Indo-Pak conflicts.

Kargil War (1999)

The Kargil war began on May 3, 1999. The Sensex and the Nifty traded at 3,378.40 level and 970.75 level respectively on May 3. The headline indices witnessed a maximum drop of as much as 0.33 per cent in the six-month period after the war began. However in the six month period following the war the Sensex and the Nifty managed to rebound up to 36.6 per cent.

Parliament Attack (2001)

The The Sensex and the Nifty traded at 3,388.59 level and 1098.75 level when the Parliament was attacked on December 13, 2001. The benchmark indices fell by as much as 8.58 per cent in the six-month period following the attack on the Parliament. In the six month period following the incident the Sensex and the Nifty declined 2.28 per cent below the level they traded on December 13.

Mumbai Attacks 26/11 (2008)

The Sensex and the Nifty traded at 9,026.72 level and 2752.25 level when the attack of 26/11 occured in Mumbai in 2008. The benchmark indices fell by as much as 10.85 per cent in the six-month period following the attack in Mumbai. In the six month period following the incident the Sensex and the Nifty surged up to 50.54 per cent over the level they traded at on November 26, 2008.

Uri Attack and Surgical Strikes (2016)

The Sensex and the Nifty traded at 28,634.50 level and 8808.4 level in the aftermath of the Uri attack which occured on September 19, 2019. The benchmark indices fell by as much as 10.38 per cent in the six-month period following the attack. In the six month period following the attack the Sensex and the Nifty gained as much as 4 per cent over the level they traded at on September 19.

Pulwama Attack and Balakot Airstrike (2019)

The Nifty and the Sensex traded at 10746.05 level and 35,876.22 level after India retaliated against the Pulwama attack through an airstrike on Balakot on February 14, 2019. The benchmark indices fell by as much as 1.64 per cent in the six-month period following the attack on the Parliament. In the six month period following the attack and the retaliation the Sensex and the Nifty declined 4 per cent below the level they traded on December 13.

Somil Maskara, Head of Research at Wallfort Financial Services Ltd told Outlook Money that during such events investors should not panic and remain 'cautiously optimistic'.

"During these uncertain times we believe investors should remain cautiously optimistic and accumulate stocks which are fundamentally strong stocks. Historically, geopolitical events have led to short term market corrections; however, markets have rebounded in the long term," Maskara said.

Maskara also advised investors to focus on maintaining a diversified portfolio and avoid any panic selling.

"Markets may remain volatile in near term, and to deal with it we advise investors should focus on maintaining a diversified portfolio across sectors and asset classes. It is crucial for investors to avoid any panic selling and rely on disciplined investment approach," Maskara said.