Bordering on peace: Markets may exhale as guns fall silent for now

With calm on edge, monsoon and Q4 will guide the mood

Domestic equity markets may open higher on Monday after India and Pakistan agreed to a ceasefire, reportedly brokered by the US, following four days of fighting. But any relief could be short-lived, with reports suggesting Pakistan breached the truce within hours.

 

Analysts expect investor attention to return to global cues and local triggers, including monsoon updates and earnings announcements. On Friday, the benchmark Sensex and Nifty fell over 1 per cent after foreign portfolio investors (FPIs) sold shares worth ₹3,800 crore amid heightened tensions between the two nuclear-armed neighbours.

 

“If hostilities cease, it will be business as usual,” said Amar Ambani, executive director at Yes Securities. “Historically, such conflicts haven’t had a lasting effect on stocks. But this time might be different — volatility could linger for months given the recent escalation.”

 

On Friday, the Sensex shed 1.1 per cent, or 880 points, to close at 79,454, while the Nifty 50 dropped 1.1 per cent, or 266 points, to 24,008. Analysts say the market could recoup Friday’s losses if tensions ease and no fresh skirmishes occur. 

 

Before Friday’s selloff, FPIs had poured nearly ₹50,000 crore into Indian stocks since April 15, marking their longest buying streak — 16 straight sessions — since June-July 2023.

 

U R Bhat, cofounder of Alphaniti Fintech, said the flare-up may have shaken foreign investors who have never faced a wartime scenario in India. “The last full-blown war was in 1971. Since then, we’ve seen only brief skirmishes. Had this escalated further, markets could have taken a steeper hit. Now, with tensions cooling, equities may stabilise near current levels or edge higher.”

 

Technically, markets may remain rangebound in the near term. “The Nifty faces resistance at 24,545, which is the 61.8 per cent retracement of the decline from its all-time high of 26,277 to the April 7 low of 21,743. Support is seen around the previous swing high of 23,870,” said Devarsh Vakil, head of prime research at HDFC Securities.