No panic on Dalal Street: Why markets aren't spooked by India-Pakistan tensions

No panic on Dalal Street: Why markets aren't spooked by India-Pakistan tensions

Indian markets showed resilience on May 7, slipping only slightly even after India launched a retaliatory strike on terror camps in Pakistan and Pakistan-occupied Kashmir (PoK). According to market participants, the action was largely expected and already factored into market pricing. While there may be some short-term volatility if Pakistan responds, experts believe India’s medium-term growth story remains unaffected.

Market expert Sunil Subramaniam said that the market is expected to handle the situation calmly, helped by strong liquidity and growing interest from foreign institutional investors (FIIs).

“Our armed forces handled the situation with both bravery and wisdom—‘with josh and hosh,’ as the saying goes,” he said.

ALSO READ: Operation Sindoor raises geopolitical stakes; past strikes speak of India's market resilience

Subramaniam also pointed out that this is not a full-blown war between India and Pakistan. The strikes specifically targeted terrorist infrastructure, not the Pakistani government or military. He called this a “Carpe Diem” moment for India, praising the government’s balanced and diplomatic response.

“There may be some near-term volatility due to concerns over a possible response from Pakistan,” he said, “but the medium-term picture for India remains strong.”

A. Balasubramanian, MD and CEO of Aditya Birla Sun Life Mutual Fund, echoed similar views. He said that markets are usually prepared for such developments.

“When the incident happened, the government reacted strongly, but markets had already priced in the risks. While developments on the ground are still unfolding, the market may not face much more correction—it has already been adjusting over the past six months,” he explained. “From a macroeconomic and corporate point of view, things are starting to improve.”

He also drew comparisons with recent global geopolitical events like the Israel-Gaza conflict and the Russia-Ukraine war. “Such incidents may cause short-lived panic, but markets tend to recover and return to their normal path soon after. I don't think this situation will lead to any major panic or long-term instability,” he said.

In the early hours of May 7, India carried out missile strikes on terror infrastructure in Pakistan and PoK. The Ministry of Defence reported that nine locations were targeted, all linked to planning the recent terror attack in Pahalgam. The Indian Army clarified that the action was focused, restrained, and meant to avoid escalation. No Pakistani military facilities were targeted.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.