Will Sensex and Nifty Continue to Rise Amidst ‘Operation Sindoor’?
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Synopsis
On May 7, the Indian benchmark indices showed resilience, reversing early losses as India executed ‘Operation Sindoor’ in response to a tragic attack. This article explores the market's reaction and the implications of geopolitical tensions on investor sentiment.
Key Takeaways
- Sensex and Nifty recovered after early losses.
- ‘Operation Sindoor’ signifies India's strategic military response.
- FIIs have been active buyers, contributing to market stability.
- Analysts suggest geopolitical tensions may affect market volatility.
- Investors should remain alert to border developments.
Mumbai, May 7 (NationPress) The Indian benchmark indices bounced back from early losses and started to climb on Wednesday as India executed ‘Operation Sindoor’ at nine terror sites in Pakistan and Pakistan-occupied Kashmir (PoK) following the heinous Pahalgam attack that resulted in 26 fatalities.
At approximately 9:34 AM, the Sensex increased by 160 points to reach 80,800, while the Nifty rose by 56 points to 24,435.35, recovering from early declines.
On the National Stock Exchange (NSE), eight out of twelve sectoral indices saw gains, while seven faced losses. The NSE Nifty Media experienced the most significant decline, whereas the NSE Nifty PSU Bank recorded the largest rise.
Among the prominent gainers on the Nifty were Tata Motors, Shriram Finance, Apollo Hospitals, Bajaj Finance, and Hindalco. Conversely, the biggest losers included Asian Paints, Titan Company, TCS, L&T, and Tech Mahindra.
Analysts have noted that what distinguishes ‘Operation Sindoor’ from a market standpoint is its precise and non-escalatory approach.
“We need to observe how the adversary reacts to these precise strikes by India. The market is not likely to be influenced by the retaliatory action from India, as it was anticipated and factored into the market,” stated VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
The primary driver behind market resilience in India is the consistent Foreign Institutional Investor (FII) buying over the last 14 trading sessions, totaling ₹43,940 crores in the cash market.
FIIs are concentrating on global macroeconomic factors such as a weak dollar, slower growth in the US and China in 2025, and India's potential for superior growth performance. This may help maintain market stability; however, investors should remain vigilant regarding border developments, according to market experts.
The significant shift in market preference towards large-cap stocks, away from overvalued mid and small caps, is noteworthy. As usual, FIIs are predominantly investing in large-cap stocks, and this trend is expected to persist.
Furthermore, geopolitical tensions are likely to introduce additional volatility, affecting short-term market trends.
Meanwhile, US stocks declined on Tuesday as the Federal Reserve commenced its two-day policy meeting. Investors are closely monitoring how President Trump's tariffs might affect the Fed's position on interest rates and the broader economic forecast.
Point of View
It’s crucial to acknowledge the importance of national security measures like ‘Operation Sindoor’ while monitoring their economic implications. The market’s rebound reflects confidence, and our focus should remain on fostering stability amidst geopolitical uncertainties.
NationPress
22/05/2025
Frequently Asked Questions
What is ‘Operation Sindoor’?
‘Operation Sindoor’ refers to India's strategic military action targeting specific terror locations in Pakistan and PoK in response to an attack that claimed 26 lives.
How did the stock market react to the news?
The Sensex and Nifty indices rebounded from early losses, with significant gains observed shortly after the news of ‘Operation Sindoor’.
What factors are driving FII investments in India?
FIIs are attracted to India's potential for growth, particularly in large-cap stocks, amid global macroeconomic shifts such as a weak dollar and slower growth in major economies.
