Operation Sindoor: Stock Markets Display Resilience Amid Rising Geopolitical Tensions

• Indian markets closed in positive territory today after a highly volatile session.

• Experts suggest a “wait and watch” approach as further escalation could trigger a market pullback.

Ahmedabad – The launch of Operation Sindoor by India has introduced a sense of caution in the markets. Experts believe that while the ongoing tensions between India and Pakistan may influence market sentiment, a sharp downturn is unlikely. The operation was a calculated retaliation targeting terrorist camps, signaling that India does not intend to escalate the conflict. As a result, markets absorbed the initial shock and ended the day in the green.

Market participants are closely watching for Pakistan’s response. Since the action was anticipated and largely factored into valuations, significant market disruptions appear less likely.

On the trading front, the Sensex opened 692 points lower at 79,948.80, compared to the previous close of 80,641.07. However, the index quickly recouped losses, surged over 200 points to touch 80,845, and finally closed 106 points higher at 80,747.

Analysts emphasized that future market direction will depend on whether the conflict remains contained or intensifies. If geopolitical risks increase, further selling pressure could be seen in Indian equities.

If Operation Sindoor is resolved swiftly, markets may witness a smart recovery. Conversely, a prolonged conflict could dampen investor confidence and fuel uncertainty. For now, a cautious “wait and watch” strategy is advisable.

Beyond Geopolitics: Other Key Market Drivers

Besides Operation Sindoor, other significant market triggers include upcoming trade negotiations. Following multiple rounds of discussions, India signed a historic trade agreement with the UK yesterday — a development likely to boost sentiment further.

Foreign Institutional Investors (FIIs) have also played a key role in supporting markets. Over the past 14 sessions, FIIs have made net purchases worth ₹45,000 crore. This consistent buying is reassuring for domestic investors. FIIs are currently focusing on macroeconomic factors such as a weakening dollar, slower growth in the US and China, and India’s potential for relative outperformance in 2025.

Nifty at 24,000: Holding or Breaking?

A central question now is whether the Nifty can sustain its position above the 24,000 level. While some correction is possible, a complete reversal appears unlikely, say experts. However, if the index falls below 24,240, a critical support level could turn into resistance, making a recovery more challenging.

Currently, only 23.8% of Nifty 500 stocks are trading above their 10-day Simple Moving Average (SMA), indicating a potential shift in broader market trends. Analysts highlight the 23,670–23,460 range as key support. If the index remains above 24,280, a swift recovery rally is possible. Technically, 24,200 remains a crucial level to watch.

Indian Markets: Proven Resilience in Times of Conflict

Historically, Indian equity markets have demonstrated resilience during periods of geopolitical stress, thanks to strong domestic fundamentals.

For example:

• During the Kargil War (May 3 to July 26, 1999), the markets declined only 0.8%.

• After the 26/11 Mumbai attacks in 2008, the Sensex rose nearly 400 points within two days, while the Nifty added 100 points.

• In 2019, the Pulwama attack led to a more negative response, with indices falling over 1.8% between February 14 and March 1.

These historical patterns suggest that unless tensions escalate significantly, Indian markets are likely to remain steady, supported by robust economic indicators and investor confidence.