The Indian stock market has been on a rollercoaster ride recently with ups and downs caused by rising tensions between India and Pakistan. This volatility spiked after India launched “Operation Sindoor” a military strike targeting terrorist camps in Pakistan and Pakistan occupied Kashmir (PoK). The operation was in response to a deadly terror attack in Pahalgam that killed 26 civilians. While the markets felt the heat they showed resilience recovering from early losses.
What is Operation Sindoor?
On the night of May 6, 2025 the Indian Armed Forces carried out Operation Sindoor hitting nine terror sites in Pakistan and PoK. The strikes targeted groups like Jaish e Mohammad and Lashkar e Taiba which were linked to the Pahalgam attack on April 22, 2025. The Indian government called the operation “focused measured and non escalatory” meaning it was carefully planned to avoid a larger conflict. No Pakistani military sites were hit which helped calm fears of a full scale war.
Despite this the news sent shockwaves through financial markets. Investors already cautious due to ongoing India Pakistan tensions worried about how far the situation might escalate. Geopolitical events like this often make markets nervous as they bring uncertainty that can affect trade, investment and economic stability.
How Did the Indian Stock Market React?
When news of Operation Sindoor broke the Indian stock market opened lower on May 7, 2025. The BSE Sensex dropped to 79948 and the Nifty 50 fell to 24233 reflecting investor anxiety. The GIFT Nifty a futures index that signals how the market might open was down over 100 points early in the day pointing to a negative start.
However the markets didn’t stay down for long. By mid morning the Sensex climbed back above 80700 and the Nifty traded near 24356 almost flat compared to the previous day’s close. This quick recovery showed that investors were reassured by the government’s statement that the strikes were limited and not aimed at escalating tensions. Historical trends also support this resilience past events like the 2019 Balakot airstrike saw the Nifty drop briefly but recover within days.
The broader markets like the Nifty Midcap 100 and Smallcap 100 faced sharper declines of 2.27% and 2.50% the previous day but they too showed signs of stabilizing. Experts like VK Vijayakumar from Geojit Investments noted that the operation’s focused nature helped limit panic as markets had already priced in a possible retaliation after the Pahalgam attack.
Which Sectors and Stocks Stood Out?
Not all sectors reacted the same way to the geopolitical news. The auto and banking sectors led the recovery with stocks like Tata Motors gaining 3.5% after shareholders approved its demerger plan. Other banks like HDFC Bank and SBI also saw gains lifting the Nifty Bank index by 0.38%. These sectors benefited from strong domestic demand and positive economic signals like the recent India-UK Free Trade Agreement which boosted auto stocks.
Defence stocks were in the spotlight as they often rally during border tensions. Companies like Mazagon Dock Shipbuilders, Hindustan Aeronautics (HAL) and Bharat Electronics (BEL) jumped up to 4%. Investors see these firms as likely to benefit from increased government spending on defence.
On the other hand, sectors like IT, FMCG and pharmaceuticals struggled. Stocks like Asian Paints, HCL Tech and Sun Pharma were among the losers as investors moved away from these defensive sectors toward more growth oriented ones. The Nifty Pharma index, for example only gained 0.39%, lagging behind the broader market.
Focus on Key Companies
Several companies drew attention due to their quarterly earnings announcements around the same time. Here’s a quick look at some of them:
- Paytm (One 97 Communications): Paytm’s stock surged 6% on May 7 after reporting a Q4 net loss of ₹540 crore slightly better than the ₹550 crore loss from the previous year. While brokerages like JM Financial had expected a small profit Paytm’s improving margins and UPI incentives boosted investor confidence.
- BSE: India’s oldest stock exchange reported a massive 362% jump in Q4 net profit to ₹494 crore driven by strong trading volumes. This sent its stock soaring making it a key performer.
- Piramal Enterprises: The company posted a net loss of ₹23 crore down from a profit the previous year due to a 6.5% drop in net interest income. Its stock still rose 6% possibly due to bargain buying after recent declines.
- Angel One: As a leading brokerage Angel One was in focus as retail investors navigated the volatile market. Its performance often reflects trading activity which spiked during the uncertainty.
Why Are Indian Markets Resilient?
Indian markets have a history of bouncing back from geopolitical shocks. During the 1999 Kargil War the Sensex gained 33% despite months of conflict. The 2019 Pulwama attack and Balakot strikes caused only a 0.2% dip with recovery the next day. Analysts from Anand Rathi estimate that even if tensions escalate the Nifty is unlikely to fall more than 5-10%.
Several factors support this resilience. First India’s economy is strong with GDP growth projected at 6.5-7% this fiscal year. Second foreign investors have been pouring money into Indian equities with ₹3795 crore in net buying on May 6. Third positive global cues like the India UK trade deal and easing US China trade tensions are boosting sentiment.
What Should Investors Do?
For investors the current volatility can be both a challenge and an opportunity. Experts advise against panic selling as historical data shows that dips caused by India Pakistan tensions are usually short lived. Rajesh Bhosale from Angel One suggests that Nifty levels around 24200-24000 could be good buying opportunities as they align with strong support zones.
Focus on fundamentally strong stocks in sectors like auto, banking and defence which are showing strength. Keep an eye on upcoming earnings from companies like Coal India and Dabur as well as global events like the US Federal Reserve’s rate decision which could influence markets.
Looking Ahead
The Indian stock market’s reaction to Operation Sindoor shows its ability to weather geopolitical storms. While volatility is likely to continue as investors monitor India Pakistan developments the market’s quick recovery and historical trends suggest that any major decline will be limited. By staying disciplined and focusing on long term goals investors can navigate this uncertainty and find opportunities in a resilient market.