Synopsis: Operation Sindoor caused early jitters in Indian stock markets, but past events like Uri, Balakot, and even the Kargil War show that markets often recover quickly. Experts believe sustained FII inflows and focus on largecaps will keep markets resilient unless escalation occurs.
The Indian stock market opened on a volatile note on Wednesday as investors assessed the geopolitical implications of Operation Sindoor, India’s retaliatory strike targeting terror hubs in Pakistan and PoK. The move came in response to last month’s terror attack in Pahalgam.
As of 10:08 am, the BSE Sensex was down 163 points at 80,448, while the NSE Nifty declined 73 points to 24,305. A total of 22 out of 30 Sensex stocks were in the red, with Asian Paints, Larsen & Toubro, HCL Tech, Sun Pharma, and UltraTech Cement among the top losers.
But history suggests markets often rebound after initial nervousness during military operations. Here's how equities reacted to similar events in the past:
Balakot Airstrikes (2019): Quick Recovery
After the Indian Air Force struck Balakot on February 26, 2019, the Sensex dropped 239 points and Nifty by 44 points. However, by the very next session, the market stabilized, showing investor confidence in the limited scope of conflict.
Pulwama Terror Attack (2019): Mild Market Dip
Following the Pulwama attack on February 14, 2019, the market’s reaction was muted. The Sensex dipped only 0.2% the next day, indicating that the lack of immediate retaliation kept investor anxiety in check.
Uri Surgical Strikes (2016): Panic Then Calm
The 2016 Uri surgical strikes led to a sharp fall—Sensex down over 400 points, Nifty by 156. But markets bounced back within days, highlighting how strategic precision and limited conflict scope cushion longer-term impacts.
Kargil War (1999): Rally Amid War
Contrary to expectations, the Kargil War saw a stock market rally. Between May and July 1999, the Sensex rose by over 1,100 points (33%), while the Nifty gained 319 points. This rally was powered by economic reforms, stable politics, and positive monsoon forecasts.
Operation Sindoor: Measured Impact So Far
Experts believe Operation Sindoor is unlikely to spook markets significantly. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that the operation's “focused and non-escalatory” nature has already been priced in by the markets. The real risk lies in potential retaliation from the other side, he added.
He also emphasized the role of Foreign Institutional Investors (FIIs), who have pumped in Rs 43,940 crore in the last 14 trading sessions, buoyed by a weak dollar, slowing growth in the US and China, and India's outperformance.
Notably, there's been a shift in investment patterns, with FIIs preferring large-cap stocks over mid and smallcaps due to valuation concerns. “This trend can continue,” Vijayakumar said.
Disclaimer: This article is for informational purposes only and should not be construed as financial or investment advice. Market movements are subject to multiple variables and can change without notice.
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