The Indian stock market can be compared to a roller coaster, with big ups and downs and periods of uncertainty. Like other global markets, it is sensitive to major world events. Things like wars, terrorist attacks, and financial crises can cause stock prices to move sharply, affecting investor confidence and market stability.
In this blog, we’ll look at how important global events from 1999 to 2025 have impacted India’s stock market, specifically the Sensex and Nifty. By understanding how the market has reacted in the past, we can learn how to handle similar events in the future.
1. The Kargil War (May 3 – July 26, 1999)
Background: In 1999, India and Pakistan fought a short but intense war in the Kargil region. The situation created fear that the conflict could escalate.
Market Response: Despite the war, the Indian stock market did surprisingly well. The Sensex rose by about 38% during the conflict as investors believed that India would manage the situation effectively.
Sensex Performance: The Sensex climbed by nearly 33% from May to July 1999 surge 1,115 points.
Nifty Performance: The Nifty also showed a positive response, climbing also by around 33% during this period with a 319 point rise.
Post Outcome: As the war ended with India reclaiming its territory, the market continued its upward movement, and by early 2000, the Sensex crossed the 5,500 mark.
Key Takeaway: Even in times of conflict, investor confidence in India’s political and economic stability can drive the market upward.
2. The 9/11 Terror Attacks (September 11, 2001)
Background: On September 11, 2001, terrorists attacked the United States, causing widespread global fear and uncertainty.
Market Response: When the Indian market opened on September 17, it reacted negatively, with investors pulling money out of the market.
Sensex Performance: The Sensex dropped by about 3.5% on the first day of trading after the attacks.
Nifty Performance: Similarly, the Nifty also dropped by 4% on the same time, reflecting the global panic.
Post Outcome: By early 2002, the market had started to recover, especially with strong performances from India’s IT sector, which had global ties.
Key Takeaway: While global shocks can cause panic in the short term, the Indian market can bounce back if the country’s growth sectors remain strong.
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3. The 2001 Parliament Attack and India-Pakistan Tensions
Background: In December 2001, terrorists attacked the Indian Parliament, escalating tensions between India and Pakistan.
Market Response: The market reacted with some fear, with investors worried about a potential war between the two countries.
Sensex Performance: The Sensex fell by around 0.84% in the weeks following the attack.
Nifty Performance: The Nifty also dropped by 0.8% during this period of uncertainty.
Post Outcome: As diplomatic tensions eased, the market began to recover, slowly but steadily.
Key Takeaway: Political tensions can cause short-term drops, but the market recovers when tensions de-escalate and peace returns.
4. The 2008 Global Financial Crisis
Background: In 2008, the global economy faced a major crisis with the collapse of Lehman Brothers in the U.S. This triggered a global financial meltdown, which also affected India.
Market Response: The Indian stock market, along with global markets, crashed. Investor sentiment turned very negative.
Sensex Performance: The Sensex fell sharply by nearly 1,408 points (7.4%) in January 2008 which gradually reached to -60%.
Nifty Performance: The Nifty mirrored this decline, dropping by -51.79% as well in the whole year.
Post Outcome: By late 2009, the market began to recover, with the Sensex bouncing back to about 17,000 points.
Key Takeaway: Global financial crises can hurt the market, but India’s strong economic fundamentals and government support measures help the market recover over time.
5. The 2016 Surgical Strikes
Background: After a terrorist attack in Uri (Kashmir), India conducted surgical strikes across the border to target terrorist camps.
Market Response: Initially, there was some nervousness, and the market dropped slightly.
Sensex Performance: The Sensex dropped by 465 points (~1.6%) immediately after the surgical strikes.
Nifty Performance: Similarly, the Nifty dipped by 156 points (~1.7%) during the same period.
Post Outcome: Within a week, the market regained its losses and stabilized, as there was no escalation into full-scale war.
Key Takeaway: When tensions do not escalate, the market usually recovers quickly from short-term volatility.
6. The 2019 Pulwama Attack and Balakot Airstrikes
Background: In February 2019, a terrorist attack in Pulwama led to the loss of many Indian soldiers’ lives. In response, India carried out airstrikes on Pakistan-based targets in Balakot.
Market Response: The market reacted with some anxiety and dropped initially.
Sensex Performance: The Sensex fell by 239 points (-0.2%) immediately after the news.
Nifty Performance: The Nifty also dropped by around 44 points (-0.2%) during this period.
Post Outcome: However, the market quickly stabilized within a few weeks, helped by optimism surrounding India’s upcoming national elections.
Key Takeaway: Political stability and swift diplomatic actions can help the market recover quickly from geopolitical tensions.
7. The 2020 COVID-19 Pandemic
Background: In 2020, the COVID-19 pandemic led to global lockdowns, disrupting economies worldwide, including India.
Market Response: The stock market saw a huge drop as fear about the virus and its economic impact spread.
Sensex Performance: The Sensex fell by 38%, dropping from 41,000 points in February 2020 to almost 26,000 points by March 2020.
Nifty Performance: The Nifty saw a similar drop, falling by 23.25% during the same period.
Post Outcome: By May 2020, the market began to recover. By the end of the year, the Sensex had crossed 47,000 points, setting a new record.
Key Takeaway: While the pandemic caused sharp declines, strong economic measures and the resilience of India’s market helped it recover quickly.
8. India-Pakistan Tensions (2025)
Background: In the previous week, tensions between India and Pakistan escalated due to a terrorist attack in Kashmir. This led to fears of potential conflict.
Market Response: The market showed some short-term volatility due to rising fears of military action.
Sensex Performance: The Sensex showed some volatility (1.5% down), with minor fluctuations as investors reacted to the news.
Nifty Performance: Similarly, the Nifty saw minor fluctuations (1.45% down) as investors grew cautious in light of the tensions.
Post Outcome: As the situation de-escalated without major conflict, the market gradually recovered and returned to normal.
Key Takeaway: While geopolitical risks can cause short-term volatility, markets often recover once tensions subside.
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What Can We Learn from These Events?
- Short-Term Market Movements Are Normal: Geopolitical events often cause sudden drops in the market, but these drops are typically short-lived, and markets tend to bounce back.
- The Indian Market Is Resilient: Despite facing major global challenges, the Indian stock market has shown resilience, recovering from each crisis over time.
- Long-Term Growth Is the Key: Even during global crises, the long-term growth potential of India’s economy remains strong. Focusing on long-term trends is essential.
What Should Investors Do During Crises?
- Stay Calm and Don’t Panic: Emotional decisions, especially during market dips, can result in losses. Staying calm helps investors make better decisions.
- Think About the Long-Term: Crises can present opportunities to buy good stocks at lower prices. Long-term investments generally offer the best returns.
- Invest in Strong Companies: Focus on companies with strong financials and good growth prospects. These companies can weather turbulent times better.
- Avoid Timing the Market: Trying to time the market can be difficult and risky. It’s better to stay invested and focus on the long-term.
Conclusion
From wars to pandemics, the Indian stock market has faced many challenges, but it has always bounced back. The key takeaway for investors is to stay calm during times of uncertainty, stick to a long-term investment strategy, and focus on companies with strong fundamentals. The market has proven time and again that even after major global events, it can recover and continue to grow.
