There are several instances between India and Pakistan having tension in their border, which causes significant concerns among government delegates around the world, with widespread calls for de-escalation, high emphasis on dialogue, and major concerns about regional stability, as two Nuclear nations have.
However, we see a different reaction in global stock markets, as we saw after the recent escalations between India and Pakistan. The stock markets don’t show a significant reaction. It could be due to the perception that the conflict is geographically limited, the conflict between the two nations keeps happening, and it has been a long-standing conflict, which is nothing new for the markets, as been going on for 78 years now.
Indian Stock Market Reaction
The Pahalgam attack occurred on April 22, 2025, as the market reaction for that day cannot be judged as it occurred close to the market closing time, However, the next day, the market opened at 24,357 which was up 190 points from yesterday’s close of 24,167 and later in the day market closed up 161 points at 24,328. Even after India launched an operation against the terror bases in Pok, on the morning of May 7th, the market’s reaction was muted, and it closed the day up 35 points.
Also read: India-Pakistan War: Which Sectors Face the Worst Impact Amid War Uncertainty?
Pakistan’s Stock Market Divergent Reaction
On 23rd April, the Next day after the attack, Pakistan had shown a small fall of 1.02 percent or 1,204 points, However, the KSE (Karanchi Stock Exchange) 100 Index has shown a strong reaction to the operation Sindoor, following the attack On May 7th the Index closed down 3,559 points or 3.13 percent, and on May 8th the Index fell by 5.89 percent or 6,482 points. The Major reaction could also be intensified by the huge rally that the Index has shown in the past year, increasing by 41.70 percent or 30,925 points from May 8th, 2024, to May 8th 2025.
Chinese Defence Stocks Reaction
China, being a key defence supplier, has seen its stock value increase since India’s Sindoor Operation. The shares of AVIC Chengdu Aircraft have seen an impressive increase of 20 percent on May 8th, and on May 7th, it had seen an increase of 17 percent. Other defence stocks also saw a good rally of up to 10 percent.
Global Market Reaction
Global markets, particularly in the US and Europe, have so far shown no direct impact from the ongoing India-Pakistan tensions. Major stock indices in these regions have not reacted broadly to the conflict, as their primary focus remains on other pressing global issues such as US-China trade relations, domestic economic indicators like inflation and employment, and monetary policy decisions by central banks.
Global markets, especially in the US and Europe, usually react mildly unless the conflict threatens to escalate regionally or disrupt key trade routes. Investor sentiment tends to stabilise if the war appears contained to the subcontinent. Overall, the direct market impact tends to be more severe locally, with limited and short-lived effects globally.
Written By Abhishek Das
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