With the Indian Armed Forces conducting a series of precision strikes targeting terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir (POK), all eyes are on the stock market with respect to how it absorbs the rising geopolitical tensions.
As far as Nifty is concerned, Rajesh Bhosale, Equity Technical Analyst at Angel One said the level of 24,200 would act as an immediate support, while the 24,000–23,800 zone serves as a crucial positional support zone, aligned with the 200-day SMA and prior breakout levels.
“Dips towards these levels can be seen as buying opportunities in line with the primary bullish trend,” he said.
Bhosale in a note said the resistance level for Nifty remains intact at 24,550–24,600, which also marks the 61.8 per cent Fibonacci retracement level, commonly referred to as the “Golden ratio.” Unless this resistance is decisively breached, the market is likely to remain in a consolidation phase, he said.
For Sensex, Shrikant Chouhan of Kotak Securities in a note on Tuesday said as long as the index is trading below 81,000, the weak sentiment is likely to continue.
On the lower side, he believes the Sensex could retest the level of 80,300. Further downside may also continue, which could drag the index down to 80,000, he said.
A dismissal of 81,000 could push the 30-pack up to 81,300-81,400, Chouhan said ahead of the India strikes.
Codenamed ‘Operation Sindoor’, Indian strikes were carried out in response to the recent terror attack in Pahalgam, which left 26 tourists dead.
As per the Ministry of Defence, nine strategically located sites — identified as key hubs for planning cross-border terror operations — were hit. The operation was “focused, measured, and non-escalatory,” the government said. No Pakistani military facilities were targeted.
In the past 25 years, there were four major India–Pakistan confrontations since the 1999 Kargil War, along with 19 other wars or war-like incidents involving G20 nations. The Pulwama attack and the Balakot airstrike in February–March 2019 resulted in a modest 1.8 per cent decline in the index.
Rating agency Moody’s in a recent note said its geopolitical risk assessment for Pakistan and India accounts for persistent tensions, which have, at times led to limited military responses.
“We assume that flare-ups will occur periodically, as they have throughout the two sovereigns’ post-independence history, but that they will not lead to an outright, broad-based military conflict,” it said.
Anand Rathi observed that even in the event of a significant escalation, the Nifty is unlikely to decline by more than 5–10 per cent. This projection was based on historical patterns and current global risk assessments. The brokerage pointed out that, aside from the 2001 Parliament attack, Indian equity markets have typically not fallen more than 2 per cent during periods of heightened tensions with Pakistan.
Even the market correction during the 2001–02 Parliament attack was likely influenced more by global factors, particularly the roughly 30 per cent decline in the S&P 500 during the same period, the brokerage noted recently.
During the Kargil War, which lasted from May to July 1999, the Nifty declined just 0.80 per cent. In contrast, following the Parliament attack in December 2001, India-Pakistan tensions led to a sharper market drop of 13.9 per cent. The Nifty slipped 2 per cent between September 18–29, 2016, after the Uri attack and subsequent surgical strikes.
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