Before the Sensex was launched in 1986, India and Pakistan fought three major wars: the First Indo-Pak War (1947-1948) over Kashmir, the Second Indo-Pak War (1965) again focused on Kashmir, and the Third Indo-Pak War (1971), which resulted in the creation of Bangladesh. Since the Sensex began in 1986, stock market data for these earlier periods is not available.
Since the introduction of the Nifty 50 index in April 1996, the only major war-scale conflict between India and Pakistan has been the Kargil War in 1999. However, the two nations have experienced several significant conflicts since then, which did not turn into full-scale wars, However, several escalated tensions have led to military operations. Notable incidents include the Pulwama attack in 2019, the Uri attack in 2016, and the devastating 26/11 Mumbai attacks in 2008.
Additionally, the Indian military has conducted several important operations in response to threats from Pakistan, such as Operation Meghdoot (1984), which aimed at securing the Siachen Glacier, Operation Cactus Lilly (1971), a strategic deployment to safeguard the Maldives, and Operation Bandar (2019), designed to neutralize militant threats in Kashmir and several others.
Overview of the India-Pakistan War
In the First War (1947-1948), India-Pakistan conflicts were driven by territorial disputes, primarily over Kashmir. India intervened after Pakistan-backed forces invaded Kashmir, leading to a UN-mediated ceasefire and the division of Kashmir.
In the Second Kashmir War (1965), tensions escalated after Pakistan’s failed Operation Gibraltar, leading to conflict as India defended its territory. Fierce battles followed, but a UN-mandated ceasefire restored the peace, however, the Kashmir dispute remained unresolved
In the 1971 Indo-Pakistan War, the war was sparked by Pakistan’s repression in East Pakistan, with India supporting independence, ultimately resulting in the creation of Bangladesh.
In the 1999 Kargil War, tensions flared after Pakistani soldiers infiltrated Indian positions in the Kargil sector of Kashmir. India launched a strong military response, recapturing key peaks, and a ceasefire was declared after international pressure, with Pakistani forces withdrawing.
Market Reaction During the Kargil War
From this Chart of the Nifty 50 during the Kargil war, it is clearly evident that market reactions are generally opposite to people’s sentiments. Markets don’t always fall during a war because investor reactions are influenced by several factors. While wars can create short-term volatility and uncertainty, they don’t always result in sustained market declines. In some cases, markets may even rise, driven by expectations of increased government spending on defence, economic recovery post-conflict, or geopolitical events that favor certain sectors.
Written By Abhishek Das
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