The global uncertainties didn’t seem to have perturbed Indian stock much in the month of April with both equity indices –the BSE Sensex rising by 3.65 percent, while the Nifty climbed 3.46 percent.
April was the second-consecutive month of positive inflow from Foreign Institutional Investors (FIIs) in the equity cash segment. FIIs invested Rs 2,735.02 crore in April, up from Rs 2,014.18 crore in March, reported IANS. Domestic Institutional Investors (DIIs) also continued their buying spree, investing Rs 28,228.45 crore in April. However, this was slightly lower than their March investment of Rs 37,585.68 crore.
The escalating tensions between India and Pakistan following the Pahalgam terror attack, which claimed 26 lives, sent shock waves to Pakistan’s financial markets, though Indian equities remained strong, signaling resilience of India’s economy.
But as tension continues to escalate between the neighbouring countries, how is Indian market prepared? Can Rising Indo-Pak tensions shape investor sentiment in Indian markets?
Gaurav Garg, Lemonn Markets Desk told Zee News, despite rising geopolitical tensions, Indian equity markets have demonstrated resilience, supported by robust Foreign Institutional Investor (FII) inflows exceeding Rs 32,000 crore. Moody’s has downplayed the potential economic fallout, citing India’s minimal trade exposure to the neighbouring country—less than 0.5% of total exports. However, a prolonged conflict could pose fiscal risks by driving up defense-related expenditure, potentially derailing consolidation efforts.
“On the investor front, FIIs have reversed their recent selling trend, buoyed by a softer US dollar and optimism around India’s strong economic trajectory, with GDP growth expected to exceed 6%. Improving or stable corporate earnings have also contributed to the positive sentiment. Benchmark indices posted mixed returns: the NIFTY rose 0.47%, the SENSEX added 0.37%, and the NIFTY MIDCAP 100 outperformed with a 1.81% gain,” Garg said.
He expressed caution that markets are expected to remain range-bound in the near term, guided by geopolitical developments, FII activity, corporate earnings, US market trends, and macroeconomic data.
“Key technical levels continue to hold, and sustained FII inflows may provide downside support. Any escalation in border tensions may trigger a short-term correction, but such dips could offer buying opportunities as markets typically rebound once uncertainty fades. While near-term volatility driven cannot be discounted, India’s strong macroeconomic fundamentals suggest that any market corrections are likely to be shallow and short-lived. As Peter Lynch aptly observed, “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves,” Garg said.