Operation Sindoor: Why investors should not panic and remain invested

Why investors should not panic and remain invested

India’s decisive overnight strike — Operation Sindoor—targeting nine terrorist bases in Pakistan and Pakistan-occupied Kashmir (PoK), has reignited concerns over geopolitical tensions. But for market watchers, the key question is: Should investors panic or stay put?

According to data compiled by Kotak Mahindra Asset Management, past military operations and conflicts—from the Kargil War in 1999 to the Balakot airstrike in 2019—have had only short-term impact on the Indian equity markets. For instance, during the Kargil conflict, the Nifty 50 fell 8.3% in the month preceding the war but surged 36.6% during the conflict and gained 29.4% over the next year.

More recent surgical strikes, like Uri (2016) and Balakot (2019), triggered mild volatility, but markets quickly regained footing. One year post-strike, Nifty 50 posted double-digit gains in both instances.

While macroeconomic stress points such as inflation and fiscal deficit tend to rise during prolonged conflicts, the report notes that GDP growth often remains resilient, supported by domestic consumption and investment momentum.

Kotak’s advice to investors is clear: avoid panic selling, continue SIPs, and stagger lump sum investments. “Short-term market swings are unsettling, but they rarely derail India’s long-term growth story,” the report states.

Markets are trading flat, although in green, reflecting endurance similar to the Indian benchmark indices' performance during geopolitical tensions, historically. Analysts suggest short term volatility but further global factors like the recently finalised UK-India FTA, ongoing trade talks with the US and domestically, valuation concerns have a larger role to play, altogether, influencing amrket sentiments.

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