Stock Market Reacts to Operation Sindoor

Indian equity benchmark indices, Nifty50 and BSE Sensex, are expected to open lower following India's announcement of Operation Sindoor, targeting terrorist facilities in Pakistan and Pakistan-occupied Jammu and Kashmir. The GIFT Nifty on NSE IX has already shown a decline, suggesting a negative start for Dalal Street.

Expert Analysis on Market Impact

"The geopolitical risk has materialized with the Indian strikes on PoK and Pakistan-based terror camps," says Ajay Bagga, a Banking and Market Expert. He predicts a negative gap in the Indian markets, similar to reactions after the Uri and Balakot strikes. The future market direction will heavily depend on whether the situation escalates.

Market Volatility and Investor Caution

Shrikant Chouhan of Kotak Securities notes that the recent tensions have paused the strong market rally observed over the past two weeks. While a decline of 200-400 points in Nifty is possible, a more significant drop is unlikely unless military conflict escalates.

Global Factors Influencing Markets

Investors are also eyeing the US Federal Reserve's rate-setting meeting, with expectations of unchanged interest rates. However, comments on inflation and growth could sway market sentiments. Meanwhile, FPIs recorded net purchases, contrasting with DIIs' sell-off.

Commodities and Global Markets

Gold prices dipped as optimism over US-China trade talks reduced demand for safe-haven assets. US stocks continued their decline amid uncertain trade agreement timelines.