Diverging Fortunes: India’s $5 Trillion Market Overshadows Pakistan Amid Regional Tensions
Amid escalating geopolitical tensions between India and Pakistan, stock markets in both nations have exhibited parallel movement in recent days.
Despite this synchronicity, Pakistan’s market remains dwarfed by India’s, which commands a significantly larger presence.
With a market capitalisation of $5 trillion, India ranks as the fifth-largest globally, underscoring the disparity in scale between the two nations’ financial systems.
Longest Winning Streak Ends Amid Geopolitical Pressures
The Indian stock market recently concluded its longest weekly winning streak of 2025, interrupted by rising border tensions that unnerved investors.
Domestic benchmark indices, including the Sensex and Nifty 50, experienced sharp fluctuations as a result of renewed hostilities along the India-Pakistan border.
Tensions reignited following India’s military action on Wednesday targeting terrorist camps in Pakistan and Pakistan-occupied Kashmir, a response to a deadly terror attack in Kashmir last month.
In retaliation, Pakistan launched strikes of its own, leading to continued cross-border exchanges between the two nuclear-armed countries.
These developments triggered a sharp downturn in the equity markets, intensified further by the Indian Army’s announcement of overnight drone and missile strikes carried out by Pakistani forces.
The growing fears of conflict escalation significantly impacted investor sentiment and led to a steep decline in market indices by the end of the trading week.
Investor Perspective: Broader View Urged
Despite the turbulence, market observers urge investors to remain calm and maintain a long-term outlook.
“The Indian markets have been resilient over the years, despite similar situations. Investors should zoom out and look at the markets from a broader perspective. Indian equity markets stand on strong fundamentals and we don’t have much to worry about. Well-diversified portfolios will weather this storm,” said Vaibhav Porwal, Co-Founder, Dezerv.
Outlook Amid Ceasefire and Strategic Victory
Market analysts believe that the recent announcement of a ceasefire between India and Pakistan may bring much-needed relief to investors. The diplomatic breakthrough is seen as a crucial strategic win for India in its anti-terrorism efforts.
“This de-escalation removes a key overhang on investor sentiment and is likely to be seen as a major positive development by financial markets,” noted Prashanth Tapsi, AVP – Research at Mehta Equities.
Tapsi further explained that markets have historically demonstrated resilience and recovered well after similar geopolitical de-escalations.
Should stability persist over the next 24–48 hours without retaliatory moves or inflammatory statements, the markets are expected to react positively.
Key Technical Indicators and Sectoral Insights
From a technical standpoint, Tapsi anticipates a significant recovery when markets reopen, suggesting a potential gap-up opening of 200–300 points in benchmark indices as investor confidence begins to rebound.
Nonetheless, he cautioned that volatility may continue, influenced by the current earnings season and broader global uncertainties, particularly those related to tariffs.
“Nifty holds above 24000. Technically, now 23500 mark becomes a key make-or-break support. More waterfall of selling expected below the same with Resistance at 24275/24401,” he said.
He added that the defense and banking sectors could witness renewed buying interest as the immediate geopolitical risks begin to fade.
Broader indices may also stage a recovery, recouping losses suffered over the past 2–3 sessions, supported by improving investor sentiment.
“All eyes would be on FII who turned negative on Friday trading session after continues net buyers in last 2 weeks,” he concluded.
With geopolitical tensions easing and a ceasefire in place, market analysts remain cautiously optimistic.
While uncertainty lingers, especially with ongoing global developments and earnings results, India’s stock market continues to rest on strong fundamentals, offering resilience in the face of temporary shocks.
