As the Indo-Pakistan conflict increases, it is here that equity markets, GDP has navigated wars

As India’s strong response to Pakistan’s escalations enters on its fourth day, a look at history suggests that previous wars have had a minimal permanent impact on domestic equity markets, the economic growth of the country is often a victim of such conflicts.

On Friday, the Nifty ended at 24,008 with a sharp cut of 1.1%, while India occupied Kashmir (POK) on May 7 to avenge the terrorist infrastructure attack in Pakistan. Things are now changing thick and fast.

In its analysis of market movement and GDP, brokerage firm JM Financial explains the impact of previous wars and how the situation is different at this time.

Here is a complete break of events and their effect:

1. The Kargil War-3, 1999 to July 26, 1999, fought on the full-scale war, Nifty jumped 7% in the war at the end of the third day. By the end of the war, the headline index has increased to 35.6%.
2. Parliament attack: This happened on December 13, 2001, and then the border stand-through-throgh, which was followed by June 19, 2002. The Nifty fell 1.8% in three sessions while 4% sank by the end.
3. 26/11 Mumbai attacks: The attack took place on November 26, 2008, and the tensions lasted till November 29, 2008. The Nifty index was up 3.8% in the operation period.
4. URI Attack + Surgical Strikes: These events appeared between September 18, 2016 to September 28, 2016, and the Nifty remained flat in the first three sessions while the end of the operation was reduced by 0.4%.
5. Pulwama Attack + Balkot Airstrike: These events arose between February 14, 2019 to February 26, 2019. The Nifty was down 0.6%, while the end of the attack increased by 0.4%.
6. Pahlgam Attack: The attack took place on April 22, 2025. When the story is still going on, the Nifty jumped 1.7% at the end of the third day of the incident. By Friday, the Nifty was still up 0.6%.

The Nifty was started in 1995 and India fought four wars before the Kargil war. The first Kashmir war which began on October 22, 1947 and ended on January 1, 1949; The second Kashmir war between July 5,1965 and September 23, 1965, the Indo-China war of 1962 and Bangladesh liberation between December 3, 1971 to 16 December, 1971.

Impact on GDP

During the Indo-China War of 1962, GDP saw a decrease of 0.8%, while JM said similar trends were seen after the Indo-Pak war in 1965, reducing GDP 2.6% in 1965 after a growth of 7.5% in the previous year. During the 1971 war, when the GDP decline was not observed, growth was 1.6% than 5.2%, the broker said.

In 1999, the Kargil war appears to be the only situation in which GDP growth (9.9%) was increased compared to 6.2% in the year of war.

While GDP has been adversely affected, JM said that the Indian economy is now much larger and more elastic than what was during the previous conflict.

(Connection: The recommendations, suggestions, opinions and opinions provided by experts have their own. This does not represent opinions of economic time)