Surgical strike brings back Kargil War sentiments; how stock markets reacted during Indo-Pak tension in 1999

By: and |
Updated: September 29, 2016 4:18:05 PM

The Kargil War, which erupted after infiltration by Pakistan was noticed across the Line of Control, saw the Sensex soaring nearly 35 per cent during the conflict period.

Sensex crashes over 500 points today after strikes against Pakistan,how investors reacted during Kargil WarA near 600 point drop in Sensex over its previous close on Thursday immediately after India’s Director General of Military Operations (DGMO) Lt Gen Ranbir Singh informed the nation of the army’s surgical strikes on eight terror camps in Pakistan-occupied territory would appear to suggest a sense of uncertainty. (Photo: Reuters)

Is the equity market nervous about escalation of conflict between India and Pakistan after the Indian army’s strikes on terror camps in Pakistan-occupied Kashmir. A near 600-point drop in Sensex over its previous close on Thursday immediately after India’s Director General of Military Operations (DGMO) Lt Gen Ranbir Singh informed the nation of the army’s surgical strikes on eight terror camps in Pakistan-occupied territory would appear to suggest a sense of uncertainty.

Could this be a short-term knee-jerk reaction or could an escalation lead to a further slump in the benchmark stock indices in India? It is anybody’s guess, but if one goes by the previous armed conflict between India and Pakistan in 1999, commonly referred to as the Kargil War, the investing community might strongly back any operations the Indian armed forces to check provocation by the neighbour.

Fe markets trudges back in history to take a look at how markets reacted after the Kargil war between May and July 1999. The Kargil War, which erupted after infiltration by Pakistan was noticed across the Line of Control, saw the Sensex soaring nearly 35 per cent during the conflict period.

During the three-month period, the benchmark BSE Sensex soared 1,163.94 points, or 34.45 per cent to 4,542.34 on July 30, 2009 against 3,378.40 on May 3, while NSE Nifty 50 index surged 35 per cent, or 339.40 points, to 1310.15 from 970.75 during the same period.

On a sectoral basis, between May and July 1999, the BSE Metal index surged the most — 53.84 per cent, followed by BSE Auto index (up 38.81 per cent), IT index (up 38.65 per cent), BSE Capital Goods index (up 38.50 per cent), BSE Healthcare index (up 22.46 per cent), BSE FMCG index (up 20.54 per cent) and BSE Consumer Durables index (up 18.23 per cent). During the period, shares of Ashok Leyland, Waterbase, Ballapur Industries, Kesoram Industries and Excel Industries jumped by 267 per cent, 212 per cent, 209 per cent, 196 per cent and 189 per cent, respectively, and stood among top gainers in the BSE. On the other hand, Sanwaria Agro Oils, Cranex and Welspun Corp slipped by 55 per cent, 47.50 per cent and 45.45 per cent, respectively in the three month period

If Kargil conflict is to go by, you as investor need not panic after the BSE Sensex on Thursday breached its 28,000 level by falling 572.89 points, or 2.02 per cent, to 27,719.92, while NSE Nifty fell below 8,600 level by dropping 186.90 points, or 2.13 per cent to 8,558.25.

Domestic equity markets slumped sharply on Thursday after India said it had conducted “surgical strikes” on terror camps along LoC on Wednesday night. Sensex closed below 28,000 by plummeting 465.28 points to end at 27,827.53, while Nifty nosedived 153.90 points to settle at 8,591.25.  However, NITI Aayog chief Amitabh Kant has asked the investors to take this move of Indian government of surgical attacks positively.

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