Indian Stock Market Resilient Amid Geopolitical Tensions
The market's ability to absorb geopolitical shocks has been demonstrated in the past, and with the sustained FII buying and focus on domestic growth, the Indian stock market is expected to bounce back from any temporary setbacks. The key will be to monitor the situation and adjust strategies accordingly, as the market continues to navigate the complexities of geopolitical tensions.
The Indian equity benchmark indices, Nifty50 and BSE Sensex, experienced a volatile trading session on Wednesday, with the Nifty50 trading at 24,291.05, down 89 points or 0.36%, and the BSE Sensex at 80,387.58, down 253 points or 0.31%, following India's airstrikes on terrorist facilities in Pakistan.
Market experts believe that the market is unlikely to be significantly impacted by the retaliatory strike, as it was largely anticipated and factored into the market. The sustained buying by foreign institutional investors (FIIs) over the past 14 trading days, totaling Rs 43,940 crores in the cash market, has been a key catalyst for the market's resilience. Several major Sensex constituents, including HCL Tech, Asian Paints, and Nestle India, experienced declines, while Tata Motors, HDFC Bank, and SBI showed positive momentum.
The Indian Army confirmed striking terror infrastructure used to plan and direct attacks against India, and market experts are cautious about the potential geopolitical risks. However, historical data suggests that markets tend to recover quickly from such incidents, with the Sensex and Nifty seeing only a mild reaction in the past, such as a drop of 0.2% and 44 points respectively after the Pulwama attack. Fund manager A. Balasubramanian of Aditya Birla Sun Life AMC recommends focusing on sectors linked to the domestic growth story, as any knee-jerk reaction is likely to be temporary.
The future impact on the market will depend on whether the strike remains contained or expands, and market experts will be closely monitoring the situation. For now, the Indian stock market appears to be resilient, with the Sensex and Nifty opening slightly in the green on Thursday, with the Sensex up 115 points and Nifty gaining 26 points.