When on a high, D-Street takes less tension for India-Pakistan border tussles

The Indian Army’s claim on Tuesday that it destroyed several Pakistan Army posts across the Line of Control (LoC) in retaliation sent the Nifty50 tumbling below the 9,400 level.

Most stocks, especially midcap and smallcap ones, got hammered badly, hitting investor sentiments at a time when the indices are hovering around their all-time high levels.

Analysts say should the situation escalate, it will trigger more profit booking in the coming sessions, setting off further correction.

However, data shows the domestic equity market is increasingly growing immune to such border skirmishes and such events had not had any long-lasting impact on the market previously.

“India is a strong growth story. These types of events do not have any long-term impact on the domestic equity market,” said G Chokkalingam, Founder, Equinomics Research.

Ambareesh Baliga, independent market analyst, said: “As long as the sentiment is positive, all these issues will get brushed under the carpet. But the day sentiment turns negative, these issues would seem big and along with this there will be the GST disruption, which no one was bothered about till a few weeks back.”

A video clip released by Indian Army showed heavy artillery bombing on forward posts of the Pakistani Army in the Naushera sector along the LoC.

This is not the first time the market has reacted negatively to the news of skirmish on the border. On January 2, 2016, when six highly-armed terrorists attacked the Pathankot base of Indian Air Force and a gun battle ensued for three days, the Sensex cracked over 1,300 points in four sessions, slipping to 24,851 on January 7, 2016 from 26,160 on January 1.

In September 2016, the 30-share Sensex dipped over 70 points in two sessions on the news of the Uri attack. Heavily-armed militants attacked an army base in north Kashmir early on September 18 and killed 18 soldiers.

The benchmark indices again took a hit after Defence Ministry confirmed that India conducted surgical strikes on Pakistan-based terrorist camps on September 28 in the aftermath of the Uri attack. The Sensex plummeted 465 points to 27,827 on September 29, 2016 from 28,292 on September 28, 2016.

On May 1, 2017, when the news about beheading of two Indian security personnel by Pakistani forces broke, the BSE Sensex actually closed flat at 29,921.

On Tuesday, the BSE Sensex closed 205 points, or 0.67 per cent, down at 30,365, while NSE Nifty shed 52 points, or 0.55 per cent, to end at 9,386 after the Indian Army went public about its drill.

After Tuesday’s market hours, Jayant Manglik, President, Retail Distribution, Religare Securities, said: “We suggest traders to maintain a cautious view and keep leveraged positions hedged till the market stabilises.”