Operation Sindoor and Market Reactions: What Past Strikes Like Uri, Balakot and Kargil Reveal About Investor Behaviour? - See Here

On Wednesday, 7 May, Indian equity markets experienced mild volatility in early trading as investors evaluated the strategic impact of Operation Sindoor, in which Indian forces struck terror infrastructure in Pakistan and Pakistan-occupied Kashmir in retaliation for last month's Pahalgam terror attack. The BSE Sensex dipped 163 points to 80,448.39 by 10:08 am, while the NSE Nifty fell 73 points to 24,305.

The operation prompted market watchers to look back at past military actions — including the 1999 Kargil War, 2016 Uri surgical strikes, and 2019 Balakot airstrikes — all of which initially rattled investor sentiment but were followed by a strong market rebound over time. Historical data shows the Nifty posted gains of up to 81.9 per cent within a year after the 2008 Mumbai attacks and 29.4 per cent post the Kargil conflict.

Abhishek Jaiswal, fund manager at Finavenue, remarked: “Historical data suggests that the Indian stock market has generally responded with resilience to serious geopolitical events. Except for the Parliament attack in 2001, all other incidents studied have led to positive market returns over the medium to long term.” He added that markets appreciate strategic clarity and the absence of full-scale war, which ensures economic growth stays on track.

Market reactions to previous incidents reinforce this pattern:

Nifty 50 Performance (%) Around:

Event	Date	1M Before	1M After	3M After	6M After	12M After
Kargil War 1999	May 3, 1999	-8.3%	16.5%	34.5%	31.6%	29.4%
Parliament Attack 2001	Dec 13, 2001	10.1%	-0.8%	5.3%	-0.8%	-1.3%
Mumbai 26/11 Attacks 2008	Nov 26, 2008	9.0%	8.3%	0.7%	54.0%	81.9%
Uri Attack & Surgical Strikes 2016	Sep 18, 2016	-1.3%	-1.2%	-7.3%	4.3%	15.6%
Pulwama Attack & Balakot 2019	Feb 14, 2019	-1.1%	-6.3%	3.8%	1.7%	12.7%

Commenting on the current situation, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted: “What stands out in Operation Sindoor is its focused and non-escalatory nature. The market is unlikely to be impacted by the retaliatory strike since that was known and discounted by the market.”

He further added that Foreign Institutional Investors (FIIs) had injected Rs 43,940 crore into the market over the last 14 sessions, driven by global macro trends like a weaker U.S. dollar, slower growth in the U.S. and China, and India’s strong economic outlook. “The big shift in market preference in favour of large caps away from overvalued mid and small caps is significant. FIIs are mainly buying large caps. This trend can continue,” he added.

Of the 30 Sensex constituents, 22 were trading in the red, with top losers including Asian Paints, Larsen & Toubro, HCL Tech, Sun Pharma, and UltraTech Cement, falling by up to 1.61 per cent.

Despite the early dip, India’s equity market appears poised to stabilise, echoing its historical resilience in the face of national security events.

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