Why Indian stock market was unaffected after 'Operation Sindoor'
What's the story
Despite increased geopolitical tensions after 'Operation Sindoor,' the Indian stock market has showed surprising resilience.
The military operation, which targeted nine terror hubs in Pakistan and Pakistan-occupied Kashmir (PoK), first led to a dip in pre-opening trade for Sensex and Nifty.
However, once trading started, both the indices quickly recovered and moved into positive territory by 9:45am.
Chief Investment Strategist at Geojit Financial Services, Dr. VK Vijayakumar, attributed the market's stability to its focused and non-escalatory nature.
Market stability
Foreign inflows, UK trade deal stabilize markets
Vijayakumar said the market is unlikely to be affected by India's retaliatory strike as it was already anticipated and factored in. Strong foreign fund inflows and a trade deal with the UK also provided support to the stock market, balancing out volatility from 'Operation Sindoor.'
Foreign investment
FII buying fuels market resilience
Dr. Vijayakumar emphasized robust foreign fund inflows as a major reason behind the resilience of the market.
In the past 14 trading sessions, Foreign Institutional Investors (FIIs) have bought shares worth ₹43,940 crore.
These investors are betting on global macros such as a weak US dollar, slower growth in the US and China, and India's relative outperformance.
Investment trend
Shift toward large caps
A shift in FII strategy was also observed by Vijayakumar, moving toward large caps and away from overvalued mid and small-cap stocks.
The trend of buying into large caps could continue, further supporting market stability.
Despite this resilience, volatility continues to be a concern for traders who are advised to consider selling Nifty near the 24,500-24,550 zone and Bank Nifty near 54,600-54,900, due to weak technical cues emerging.