India-Pakistan Tension Will It Impact Stock Market ?

India-Pakistan Tension Will It Impact Stock Market & Trading?

Pulwama attack on February 14th conducted by terrorists against Indian soldiers has triggered military escalations between India and Pakistan.

Indian Air Force conducted airstrikes against terrorist camps located inside Pakistan, and Pakistani Air Force has attempted to retaliate but failed.

The Indian Army’s claim on Tuesday that it destroyed several Pakistan Army posts across the Line of Control (LoC) in retaliation sent the Nifty50 tumbling below the 9,400 level.

Past History: Stock Market Will Not Be Impacted

If we go back to history and analyse the impact of Pokhran nuclear bomb tests in 1998 and the Kargil war in 1999, then we will find that yes, there can be short term, immediate effect.

But there won’t be any long-term implications, and the market will rebound.

Pokhran Nuclear Tests Impact on Market

On 11th and 13th May, 2008, India conducted Pokhran Nuclear tests and stunned the world. If we leave aside the sanctions which were imposed on India by India and EU and only observe the Sensex, then we will find that there was no negative effect whatsoever.

The Sensex lost 7% in three days, but then, recovered 5% in next 2 days.

Kargil War Impact on Market

Kargil War triggered on May 3rd, 1999 and July 26th, 1999 was the official end date.

During this period, Sensex gained 38%.

India’s GDP was maintained at 6.5% annual growth, and there was no negative effect of the war.

During the Uri surgical strike, the Sensex lost just 1.2%, but the market recovered the loss in the next 3 sessions.

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