Home / Markets / Stock Markets /  Stock markets likely to gain after IAF air strike: Analysts

Mumbai: The IAF air strike on JeM camps in Pakistan is a positive for the markets as it illustrates a "decisiveness" in foreign policy and increases the chances of Prime Minister Narendra Modi to retain power after elections due April-May, say analysts.

The comments come in the wake of concerns shown by investors in the immediate aftermath of the IAF air strikes in Pakistan.

On Tuesday, BSE Sensex and the broader Nifty index fell as much as 1.3% intraday before paring losses to end the day 0.66% and 0.41% weaker.

"We see this panic gap down and any further slide as a buying opportunity which has been the case in past such events as well. And this gives higher odds to the Modi government staying on, post elections," Sameer Kalra, an equity research analyst and founder at Target Investing, said in a note Tuesday.

Economists at State Bank of India said the stock markets are likely to gain after the IAF strikes as they will see the action as one that builds a positive deterrence—illustrating a decisiveness in foreign and national security policy.

In a note, SBI economists gave an account of how the markets reacted to the earlier armed conflicts, such as the surgical strike in 2016 and the Kargil war, where Pakistani intruders were pushed back.

During the Kargil conflict between May and July 1999, leading stock indices showed an initial decline but strong recovery thereafter, while after the surgical strike, the Sensex gained 100 points. The rupee too had gained, the SBI note observed.

The SBI report also deemed to suggest that just like the previous actions, conflicts are "more localised in nature".

It can be noted that the markets opened in the red Tuesday, after the IAF air strikes in the wee hours of Tuesday. The markets recovered thereafter.

In a swift and precise air strike following the Pulwama terror attack, India Air Force's (IAF's) fighter jets destroyed Jaish-e-Mohammed's biggest training camp in Pakistan, killing a "very large number" of terrorists, trainers and senior commanders.

The operation, described as a "non-military, pre-emptive strike", was welcomed by the entire political spectrum and military experts, who had been advocating retribution after the 14 February Pulwama attack, that killed 40 soldiers of the Central Police Reserve Force (CRPF).

The suicide attack—an explosives-laden car was rammed into a CRPF bus part of a larger convoy travelling to Srinagar from Jammu—was claimed by the Jaish-e-Mohammed.

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