Geopolitical risks, particularly in South Asia, are emerging as a potential drag on India’s growth prospects. The recent surge in India-Pakistan tensions has added to Moody’s list of concerns.
However, financial markets have stayed largely unaffected. The Nifty 50 index, which initially dipped following the attack, quickly rebounded and surpassed pre-crisis levels by early May. Global indices, including the Dow Jones Industrial Average, showed no significant volatility related to the developments. This market resilience suggests that investors, while not indifferent, are treating the current escalation as political theatre rather than a prelude to actual conflict.
The lack of panic reflects a growing familiarity with India-Pakistan flashpoints. Events like the 2016 Uri attack, the Balakot airstrikes in 2019, and other cross-border incidents have built a pattern in which heightened rhetoric and limited military action do not escalate into full-scale war.
However, it is important to emphasise that while markets may appear calm, the risks are not trivial. A single miscalculation, on the border or in diplomatic signalling, could quickly change the equation.
Financial markets may not always be early indicators of geopolitical shifts; they respond to events more than anticipated. The apparent calm could be masking deeper uncertainties.
Where the realty sector stands
Wars trigger fear and uncertainty, and the real estate market thrives on long-term stability. Buyers may delay purchases, leading to lower transaction volumes. Sellers may lower prices to liquidate properties faster. Developers could pause launches due to raw material price volatility and market anxiety.
For now, the real estate investors appear to be trusting the pattern of managed hostility, while homebuyers seem to be largely unaffected. We will keep a close watch on the latest developments and hope it will end as a border skirmish with no big damages to our armed forces, the country and its citizens.
