Indian Stock Market Reacts Cautiously Post-Pahalgam Attack, History Suggests Resilience

Suspense crime, Digital Desk : The Indian stock market showed weakness in the immediate trading sessions after the Pahalgam terrorist attack. Analysts have taken a cautious approach due to issues regarding India's possible action and the persistent LoC tensions with Pakistan.

As per the market analysts, investor attention has now shifted towards how India will react in the international arena, both in terms of defense and diplomacy.

Historical Geopolitical Incidennts Along With The Market

Pulwama Attack (2019):

The 26th February Balakot air strikes resulted in a drop of 239 points for Sensex and 44 points for Nifty. The market quickly recovered, though, with Sensex rising by 165 points the following day and ending the day flat.

Uri Attack (2016):

The surgical strikes that followed the Uri terror attack resulted in a dip of over 400 points along with a 156 point loss for Nifty during intraday trading.

26/11 Mumbai Attacks (2008):

In spite of the dreadful nature of the attacks, Sensex rose by 400 points over the course of 2 trading days, whereas Nifty saw an increase of 100 points.

Kargil War (1999):

Sensex increased during the Kargil war, rising by 1,115 Points while Nifty also witnessed an increase to 319 points. This marks a 33% increase in the 3 month period.

Professional Analysis on Current Market Trends  

In his assessment, independent research analyst Deepak Jasani observes that the market behavior we are experiencing today is reminiscent of previous behavior patterns witnessed during geopolitical tensions.  

As it usually happens, domestic investors panic and sell first, followed by foreign investors who continue buying which culminates in market recovery.  

Except a noted lack of clarity regarding the retaliatory measures India is planning to take, there is little chance for volatility in the market, which seems to be the case for the foreseeable future.  

Firmly establishing cautious sentiment, results from Q4FY25 earnings have mostly met or missed expectations without providing much optimism towards the market.  

High Network Individuals Exercise Caution  

Formerly published thoughts by independent analyst Amreesh Baliga indicate discussions held with a few high-net-worth individuals (HNIs) show a greater range of concerns than expected.  

This careful attitude has contributed to the selling pressure, that just about explains the fall the market witnessed over the last 2 sessions despite FIIs have been net buyers.  

While some corrective movement may lay ahead, it is unlikely markets will crash significantly unless risks surrounding geopolitics rise sharply, according to Baliga.  

Another independent analyst Ajay Bagga recommends that markets may experience short but sharp corrections if India decides on kinetic action.  

The determining factor here would be the extent to which the hostilities are allowed to escalate.

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