In a significant military development, India’s Armed Forces launched ‘Operation Sindoor’ late Tuesday, targeting terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir (PoK). The operation has sparked global attention — politically and financially — raising questions about its impact on the markets.
This article examines how markets have historically responded to India’s military strikes and looks at how they are reacting to the latest developments under Operation Sindoor.
What’s Happening?
In retaliation to the deadly Pahalgam attack on April 22 — which claimed 26 lives (25 Indian citizens and one Nepali) — the Indian Armed Forces initiated Operation Sindoor on Tuesday night. The mission targeted terror camps located in Pakistan and PoK.
According to the Ministry of Defence, the targeted sites were being used to plan and execute attacks against India. Nine locations were hit in total. The ministry clarified that no Pakistani military bases were involved, with India deliberately choosing its targets to exercise strategic restraint.
How is Today’s Market Reacting?
Indian equity benchmarks Nifty50 and BSE Sensex opened marginally lower on Wednesday (May 07), defying expectations of a sharper decline after Operation Sindoor. The markets, however, quickly recovered and touched a high of 24,449.69. At the time of writing (10:17 AM), the Nifty50 is trading at 24,301.20, down 78.49 points or 0.32%, while the BSE Sensex is at 80,392.19, down 248.88 points or 0.31%. The pullback after hitting the day’s high reflects a cautious stance among investors.
Meanwhile, the India VIX (volatility index) has continued its upward trend since April 23, rising another 3.25% today to approximately 19.60 — signalling growing nervousness in the market.
Read More About- India-Pakistan Stand-Off: The Economic War Has Already Begun
How Markets Have Reacted to India’s Military Strikes in the Past
The Indian stock market has shown varied responses to past military actions, particularly during tensions with Pakistan:
Kargil War (1999): Despite the two-month-long conflict, the markets only saw a mild 0.8% decline.
Mumbai 26/11 Attacks (2008): Surprisingly, the Sensex rose by 400 points and the Nifty by 100 points over the two days following the attack.
Surgical Strikes (2016): In response to the Uri terror attack, India conducted surgical strikes in Pakistan. This led to a sharper market reaction, with the Sensex falling over 400 points and the Nifty dropping 156 points in a single session.
Balakot Airstrikes (2019): After the Indian Air Force struck terror camps in Balakot on February 26, the Sensex fell by 239 points and the Nifty by 44 points. However, both indices quickly stabilised the next day — the Sensex opened 165 points higher and ended flat. The earlier Pulwama terror attack had minimal market impact, with indices slipping only 0.2%.
These events highlight the Indian market’s resilience during geopolitical tensions, often supported by the underlying strength of the domestic economy.
Read More About- Kargil to Pahalgam: An Analysis of India’s Market Response to Conflict
What’s Next?
As Indian markets trend lower and the India VIX continues to climb, investor sentiment remains cautious. The next move will depend largely on Pakistan’s response.
According to LiveMint, Kranthi Bathini of WealthMills Securities noted that while Indian equities may react sharply in the short term, a gradual recovery is likely — provided the situation doesn’t escalate. A prolonged or widened conflict could dent investor confidence.
Market expert Ajay Bagga also pointed out that the geopolitical risk to Indian markets has now materialised with the strikes. He added that such events typically cause sharp, short-term volatility, with markets stabilising quickly if tensions don’t escalate further.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
