Athira Sethu
Kochi, 7 May 2025
India, in the early hours of May 7, conducted a series of missile & drone attacks in nine places in Pakistan and Pakistan-occupied Kashmir (PoK) under “Operation Sindoor’ to avenge the terror attack perpetrated against tourists in Pahalgam of Kashmir last month.
But the Indian stock market did not show any concerns with both Nifty and Sensex ending in green on Wednesday. Experts believe that the market had already anticipated this action.
Experts feel that the strike was extremely targeted and did not touch any Pakistani military installations, thus it did not instill fear of a full-fledged war. Due to this, the market remained tranquil.
The India VIX, reflecting how much the market could vary in the upcoming 30 days, increased slightly by 1.73% to 19.33. This also reflects that investors are not too concerned.
This was the first-ever such strike since the 1971 war when India employed its army, navy, and air force simultaneously. The present strike, “Operation Sindoor,” was viewed as a cautious and well-thought-out action.
Experts report the market will now be focused on three key things:
- Whether increased military action will take place
- International trade news
- The U.S. Federal Reserve interest rate announcement on May 7
Research reveals that previous India-Pakistan confrontations did not result in large market crashes. On average, markets drop somewhat (around 5.7%) and then recover strongly within the following six months.
Other good news is also supporting the market. These are declining crude oil prices, foreign investors (FIIs) investing in Indian shares, and the India-UK free trade agreement advancing.
Given India’s economic heft, and superior military strength over Pakistan- which is facing near bankrupt kind of financial crunch-; most market participants see less possibility of a full-scale war between two nuclear-powered rivals.
