Stock Market Update: Will Operation Sindoor Impact Bull Run? Check What Should Investors be Careful About

Stock Market Update: The attack by Indian forces on terrorists’ camps under Operation Sindoor may escalate the conflict between India and Pakistan. It is the deepest strikes carried out by India inside Pakistani region since 1971. The Indian stock market will be impacted but not much if there is no major retaliation from Pakistan.

What is Operation Sindoor?

India confirmed early morning on Wednesday that it has launched Operation Sindoor. Operation Sindoor is a reply of India to the terrorist attack in Pahalgam in which at least 26 people were killed. Under the operation, India is conducting a precise and restrained response which is designed to be non-escalatory in nature. It targeted only known terror camps. No Pakistani civilian, economic or military were targeted as per statement given by Pakistan.

How Indian Stock Market Reacted on Operation Sindoor?

The Indian stock market did not show any impact of this operation which is going to increase tensions between India and Pakistan. 
Sensex closed on previous day at 80,641 and opened lower by 693 points at 79,948 but immediately recovered to the level of 80,845. The index was then become range bound and was moving between 80,400 and 80,700. Nifty closed on previous day at 24,379 and opened lower by 146 points at 24,233. It recovered to the level of 24,449 and then was fluctuating between 24,300 and 24,400. Other major indices were almost flat.

Can India-Pakistan Conflict Impact Bull Run in the Indian Stock Market?

According to experts, conflicts between India and Pakistan can impact the market sentiment as the market reacts immediately to the emotions of traders and investors. Experts are not expecting any major drawdown in the Indian stock market due to the operation is focused, measured, and of a non-escalatory nature, which avoided any Pakistani military or tactical sites.

Long-Term Impact of Military Conflict on Stock Market

If the conflict between India and Pakistan continues for a longer period, it could sink the stock markets as per market analysts. But recovery can be seen in a while if the attacks are only on limited targets and the tensions are lessening. History shows that Indian stock market has done well during and even after any conflict with Pakistan most of the time and same is expected this time. Foreign institutional investors (FII) are investing continuously even after the geopolitical concerns over last two weeks. This is evident of our economic resilience to these short-term conflicts. 

Prolonged conflict which is unexpected at this moment, can impact the market. Investors generally prefer to avoid risk in this case and thus they can try to sell their holdings and avoid fresh buying. Historically, Indian market has reacted immediately to geopolitical tensions in the short-term but recovered very soon once things become almost normal.
At the time of Kargil conflict in 1999, Indian stock market experienced a substantial correction. However, it bounced back strongly after conflict came to an end.

What things to keep in mind by investors in the current situation? 

Geopolitical tensions often trigger concerns about the safety and stability of investment. For investors and traders, the focus should shift from growth to the protection of investment. Here are some recommendations for investors to be followed at this time:
•    Build Emergency Fund: In times of geopolitical uncertainty, financial resistance is more important, according to experts. There must be an emergency fund to cover six to twelve months of essential expenses
•    Avoid Panic: Market turmoil is a common outcome of war-related news. But being terrified due to this can result in significant loss. Investors should avoid irrational reactions. Maintaining a diversified portfolio is recommended. Portfolio can be rebalanced as per situation. Don’t let short-term upset disrupt the long-term goals.”
•    Insurance and protection for the family: With increased tension in border areas, it is important to ensure protection systems. It is sensible to have insurance coverage for the protection of the family.

Due to the Operation Sindoor, there is very little expectation of any impact on the Indian stock market as it is focused, measured, and non-escalatory.