Stock Market May Face 5-10% Correction If India-Pakistan Tensions Escalate: 

April 26, 2025 – New Delhi
The Indian stock market could experience a significant correction of 5-10% if tensions between India and Pakistan escalate, according to a recent study by Anand Rathi. The research suggests that geopolitical risks, such as rising conflicts between the two neighboring nations, could severely affect investor sentiment, leading to short-term volatility in the equity markets.

On Friday, the benchmark indices in India closed lower, with analysts pointing to mounting concerns over the potential flare-up in India-Pakistan relations. This has weighed on market confidence, particularly within sectors sensitive to geopolitical instability, such as defense, infrastructure, and foreign trade.

Anand Rathi's study underscores that such geopolitical developments have historically led to significant corrections in the stock market. Investor uncertainty often heightens during times of potential conflict, affecting both domestic and foreign investments. The study highlights that the Indian market could face a 5-10% correction in the event of any major escalation, a trend seen in the past during periods of heightened political tension in the region.

Experts warn that while the Indian economy has shown resilience in the face of various challenges, the potential for a geopolitical crisis remains a key risk factor for the stock market. With a complex relationship between India and Pakistan, any further deterioration in diplomatic ties could send shockwaves through the financial markets.

For now, investors are advised to closely monitor developments between the two countries, as a flare-up could have far-reaching consequences for both the market and the broader economy.

As tensions between India and Pakistan continue to simmer, market participants will remain on edge, with analysts urging caution in the coming weeks.

special thanks to NDTV Profit.