In a measured response to the recent Pahalgam terror attack, India launched overnight precision missile strikes on terror hubs in Pakistan and Pakistan-occupied Kashmir (PoK), the first such coordinated operation since the 1971 war. Despite the military action, Indian stock markets opened with muted reactions on Wednesday, suggesting investor confidence remains intact.
The benchmark indices BSE Sensex and NSE Nifty traded relatively flat in early deals. The Sensex slipped marginally by 30 points to 80,610.93, while Nifty hovered around 24,377.15. According to analysts, the non-escalatory and targeted nature of the operation—dubbed “Operation Sindoor”—helped allay fears of broader conflict.
“The fact that no Pakistani military facilities were targeted, and that the operation was anticipated, helped contain market jitters,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “Markets had already discounted the retaliation.”
The India VIX, often referred to as the fear gauge, reflected this sentiment, inching up by just 1.73% to 19.33—indicating that market participants are not expecting heightened volatility over the next month.
First Major Strike Since 1971 War
“Operation Sindoor” saw coordinated strikes by India’s Army, Navy, and Air Force on nine identified terror hubs. According to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, the strikes mark a significant but controlled step in India’s security response.
“Markets now hinge on three catalysts: the possibility of further military action, developments in global trade tariffs, and the U.S. Federal Reserve’s monetary policy decision scheduled for May 7,” said Tapse.
He added that Nifty remains in a volatile zone with a key support level placed at 24,171. He advises traders to consider profit-booking around the 24,500–24,550 range on Nifty, and 54,600–54,900 on Bank Nifty.
India-UK FTA: A Game-Changer
While geopolitical tensions loom, other fundamental positives continue to support Indian equities. One of the major tailwinds comes from the recently concluded India-UK Free Trade Agreement (FTA).
“This deal is a bold leap towards ‘Viksit Bharat 2047’,” said Nirmal Jain, Founder of IIFL Group. “It offers zero-duty access for 99% of Indian exports, a huge boost for our MSMEs and services sector. The three-year social security exemption for professionals will also encourage overseas deployments.”
Jain believes the FTA will enhance India’s integration into global value chains, strengthening its economic footing amid global uncertainties.
FPI Inflows Add Fuel to Resilience
A strong show of confidence by foreign investors continues to cushion market fluctuations. In the last 14 trading sessions, Foreign Portfolio Investors (FPIs) have poured in a staggering Rs 43,940 crore into Indian equities.
“The resilience of the Indian market is driven largely by consistent FII buying,” said Vijayakumar. “Global macros such as a weakening dollar, slower growth in the U.S. and China, and India’s superior growth outlook are making Indian equities an attractive bet.”
With global attention now on the U.S. Fed’s next move and any response from across the border, Indian markets remain cautious but not alarmed.
For now, traders and investors appear to be banking on India’s strong economic fundamentals, geopolitical restraint, and robust foreign capital flows to keep the markets stable.
