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We are all aware of the relationship between India and Pakistan. Tensions between these two neighbours often go beyond politics.
One of the first places it shows up is in the stock market. Your confidence as an investor can be shaken by a single event across the border.
You must have heard about the recent Pahalgam terror attack. What you probably didn’t hear is that within 2 weeks, Karachi’s stock market dropped over 7,000 points.
Also, in our country India, the Nifty slipped 1.2% in a day, while defence shares rose nearly 7%.
Such events and happenings aren’t new. The market atmosphere changes almost every time the atmosphere gets tense.
Well past events help us in having a clearer picture. We can see that every major attack or conflict between these countries has left a mark on the stock market.
Read More - Indo-Pak Conflict: Do Your Bank FD Rates Skyrocket or Plummet
However, it is also noticeable that recovery has also been consistent. We can see market reaction during past conflicts:
Year | Major Event | Fall in Nifty | Time to Recover |
1999 | Kargil Conflict | -12% in 30 days | 90 days |
2001 | Attack on Parliament | -5% in 3 days | 15 days |
2016 | Uri Surgical Strike | -1.5% same day | 7 days |
2019 | Pulwama & Balakot | -3% in 5 days | 10 days |
2024 | Poonch Terror Attack | -2.2% in 2 days | Not yet recovered |
You can see that trend is clear. You can analyse that there was a fall, but it does not last for a long time.
Most of the time the market corrects itself, within a few weeks to months.
If you check regular updates of the stock market then you might have noticed that after the Pahalgam attack:
Being an investor you must have noticed that not every part of the stock is impacted in the same way. Some sectors actually benefit. However, others face short-term damage.
Sector | Likely Impact | Reason |
Defence | Gains | Anticipation of higher defence spending |
Aviation | Loss |
Foreign investors trade with a lot of precaution. They watch such developments closely. You can see in the recent data that they are not panicking but trading cautiously.
Date Range | FPI Net Investment (₹ crore) | Trend |
April 10 to 15 | -1,457 | Outflow |
April 16 to 20 | +318 |
April 21 to 25
+1,104
Strong inflow
April 26 to 30
-567
Mixed signals
Despite the tensions, you can see that foreign inflows returned within a week. Foreign investors still believe that local stocks, like banking and infrastructure, can grow in the long run.
In the current market, retail investors are playing a huge role than ever. As per the reports, using SIPs, mutual funds collected over ₹19,000 crore in April 2025.
Higher oil prices, airspace restrictions
Travel and Tourism | Loss | Drop in bookings, safety concerns |
Pharma | Neutral | Steady demand, low dependency |
IT | Slightly Loss | Weak global sentiment |
Mild inflow
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We can see that small investors are not being spooked by the headlines. They are continuing their monthly investments and looking at the long-term picture.
An international tense environment impacts more than just stocks. In such situations the rupee might weaken, oil sometimes becomes expensive, and gold becomes a safer option.
Asset | Recent Change | Market Effect |
Rupee | Depreciated from ₹82.3 to ₹83.1 per US Dollar | Hurting heavy sectors of import |
Brent Crude | Rose from $87 to $91 per barrel | Increasing input costs for many firms |
Gold | Up 3.5% | Seen as a safe place during the crisis |
More and more people are now choosing safer options. We can see this from the rising price of gold and falling rupee.
This creates problems for companies that spend more on oil brought from other countries. Their costs go up, and their stock prices may fall.
Also Read - How War Destroys Civilian Jobs, Farms, and Small Businesses Beyond the Economic Stats
If you are an experienced investor then you will not rush to sell. Instead, you will make small adjustments.
Action | Why is it used? |
Diversify Holdings | Reduce risk from one sector |
Keep SIPs running | Avoids timing mistakes |
Add gold to the portfolio | Provides stability |
Avoid panic selling and hold good stocks | Strong companies bounce back |
Watch defence shares | May gain in short term |
Tension between the borders surely brings market corrections. However, we can see that the pattern is clear: after the fall comes recovery.
Each sector reacts differently in a tense environment. You as an investor will adjust your strategy. The broader economy will keep moving.
For now, it makes sense to stay alert, stay diversified, and avoid hasty decisions.
1. Why does the value of the rupee fall during tensions in stock markets?
The value of the rupee reduces as you as an investor feel unsure and prefer to move your money to safer places. Hence, the value of the currency falls.
2. Which stocks generally perform well during conflicts?
Companies related to defence usually perform better. People generally expect more spending on defence, so the prices of its stocks go up.
3. If the market is going down due to tension should I stop my SIP?
It is advisable not to stop your SIP. As, stopping can break your long-term plan and markets generally recover after some time.
4. Does political tension always cause the stock market to go down?
Not always. But it can make the market drop for a short time. It depends on how serious the situation becomes.
Other Informative Pages | ||
How to Invest in Global Stocks from India: Step-by-Step Guide | ||
