Operation Sindoor: Sectors/Stocks That Could See Major Gains Or Losses

In order to exact revenge for the deaths of Indian citizens in Pahalgam, India initiated Operation Sindoor on Wednesday and targeted terrorist hideouts in Pakistan. Nine terrorist spots in Pakistan and Pakistan-Occupied Kashmir were the targets of missile assaults by the Indian military early on Wednesday.

History indicates that although stock markets often either stay mostly unchanged or have a significant recovery following such military actions, specific sectors receive significant attention from the market watchers. Given the growing tension between India and Pakistan, the defense and aerospace sectors will continue to be attractive amid geopolitical tensions that are predicted to cause further volatility and impact short-term market movements.

"What stands out in "Operation Sindoor" from the market perspective is its focused and non-escalatory nature. We have to wait and watch how the enemy reacts to these precision strikes by India. The market is unlikely to be impacted by the retaliatory strike by India since that was known and discounted by the market," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Sectors In Focus

As per Mr. Gaurav Goel, (Entrepreneur and SEBI Registered Investment Advisor), " One sector that would probably see greater order inflows and more budget allocations would be the defence sector. The leading public sector companies would be the biggest beneficiaries. Shipping, logistics and companies involved in supplying armoured vehicles, missile manufacturers and part suppliers would gain. Fearing a retaliatory strike, there is also a tendency amongst general public to hoard important consumption items, fuel and medicines. Hence consumption, Oil marketing companies and pharma companies can see some uptick in their revenues."

Stocks In Focus Today

Analysts expect that stocks like Hindustan Aeronautics (HAL) and Paras Defence & Space Technologies Limited will be in focus today as investors keep an eye on the border's developments.

As per A R Ramachandran, Independent Research Analyst, "HAL stock price is expectedly bullish on the Daily charts with strong support at 4411. Even though on the higher side, a Daily close above resistance of 4674 could lead to a target of 4974 in the near term."

Whereas Paras Defence stock price is bullish yet overbought on the daily charts with strong support at 1300. A daily close above resistance of 1466 could lead to an extended target of 1567 in the near term, A R Ramachandran further recommended.

Nifty 50's Historical Performance During India-Pakistan Tensions

According to the Bajaj Broking Research Team, the Nifty 50 has historically stayed steady during times of escalating tensions between India and Pakistan, and market dips were normally mild, with an average drop of 5.27%. The Nifty typically has experienced an average 5% drop during Indo-Pak conflict.

The market performance after each Indo-Pak war is looked at, including the Kargil War (1999), the Indian Parliament Attack (2001), the 2008 Mumbai Taj attacks, the Uri surgical strikes (2016), and the Pulwama-Balakot war (2019). Notably, the Nifty has demonstrated medium-term durability in spite of the initial shocks. For instance, after a modest peak drawdown of only -0.80% during the Kargil War, there was a noteworthy 32% return in three months and a 37% return in six months. On the other hand, the Indian Parliament Attack saw the most severe initial effect, with a drop of -13.90%; nevertheless, it regained 5% after three months. Over the course of six months, the Mumbai attacks produced a 50% return despite a -7.73% drop, as per Bajaj Broking Research.

In general, the market has historically recovered with average returns of 7% over three months and 19% over six months, highlighting the market's propensity to recover following crises, even if such events can cause short-term volatility.

"Exceptions to this trend include the 2001 Indian Parliament attack and the 2008 Mumbai Taj attacks, where the market fell more sharply-though much of that drop was due to global economic factors rather than the conflicts themselves. Overall, this shows that investors tend to look past short-term geopolitical events and focus more on the broader economic outlook," said Bajaj Broking Research Team.

"Resilience: Despite geopolitical shocks, the Nifty has shown robust recovery in most cases, especially over a 6-month horizon. Deepest Drawdown: Parliament attack in 2001 (-13.9%), which was more influenced by global uncertainty than Indo-Pak tensions alone. Strongest Rally: Post-Kargil War, with a 32% gain in 3 months and 37% in 6 months. Consistent Recovery: In 4 of the 5 instances, the index delivered positive 6-month returns," Bajaj Broking Research Team commented.

It also indicates that even while there is some short-term volatility, the market usually bounces back and even makes significant returns in the medium run.

Nifty Prediction Today

"We had lowered our upside target yesterday, in light of the distribution signals and loss in upside momentum. While yesterday's slippage was held near 24400-350 region, our downside marker, only 23.8% of Nifty 500 stocks are now above their 10-day SMAs, pointing to a turn in trend in the broader market, exposing 23670-23460 on the Nifty. In the event of a sharp crack down, we expect 24050-23930 to provide a window for Nifty to consolidate. Alternatively, if dips do not extend past 24280, expect a quick recovery swing higher," commented Anand James, Chief Market Strategist, Geojit Investments Limited.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.