India-Pakistan Conflict Sparks Market Volatility as Analysts Highlight Resilient Stocks
| 2025-05-09
Stocks to buy today: Experts recommend BDL, Mazagon Dock, HDFC Bank, ICICI Bank, HUL, Bharti Airtel, L&T, and Siemens amid rising India-Pakistan tensions.
As tensions rise between India and Pakistan, analysts advise investors to focus on defence, banking, and FMCG stocks, citing resilience and recovery potential.
India-Pakistan conflict rattles markets, but Indian equities remain steady
Geopolitical tensions between India and Pakistan have injected fresh volatility into financial markets, with Pakistan’s benchmark index plunging and Indian equities showing notable resilience. Analysts are advising investors to remain calm and focus on specific sectors historically known to withstand such crises.
The Karachi Stock Exchange’s KSE-100 index fell by more than 7% on Thursday amid fears of escalation following recent military developments, including India's Operation Sindoor. In contrast, India’s Nifty 50 index remained above its key support level of 24,050, reflecting market confidence despite heightened tensions.
Defence sector sees rising investor interest
With concerns escalating following incidents such as the Pahalgam terror attack and Pakistan's missile strikes—intercepted by Indian air defences—investors are closely watching defence and aerospace stocks. According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, companies such as Hindustan Aeronautics Ltd. (HAL), Bharat Electronics Ltd. (BEL), and Bharat Dynamics Ltd. (BDL) are well-positioned to benefit from an anticipated increase in domestic defence spending.
“These firms are central to India's push for indigenous military capability and enjoy strong institutional support,” she said, noting that Mazagon Dock Shipbuilders Ltd., a major naval contractor, is similarly expected to gain from heightened defence expenditure and export opportunities.
Banking stocks viewed as safe bets amid uncertainty
Financial sector equities, particularly large private banks, are also being recommended as stable investments during the current geopolitical uncertainty. HDFC Bank Ltd., ICICI Bank Ltd., and Axis Bank have been cited for their robust fundamentals and limited exposure to international shocks.
“These banks are supported by strong domestic growth and steady foreign institutional investor (FII) inflows,” said Srivastava. “Even though the Nifty PSU Bank index recently dropped by nearly 5%, private lenders are expected to recover faster due to their capital strength and diversified portfolios.”
Consumer goods, telecom, and agrochemical sectors also stand out
Fast-moving consumer goods (FMCG) remain a key defensive sector in times of market stress. Companies like ITC Ltd. and Hindustan Unilever Ltd. (HUL), known for their steady cash flows and brand dominance, are considered reliable holdings for risk-averse investors.
In telecommunications, Bharti Airtel Ltd. and Reliance Industries Ltd., through its digital arm Jio, are seen as strategic players due to their pivotal roles in national infrastructure and communication security. Srivastava highlighted that ongoing investments in network expansion and their integral presence in the Indian economy make these firms particularly resilient during geopolitical instability.
Agrochemical stocks such as UPL Ltd., PI Industries Ltd., and Bayer CropScience Ltd. have also attracted attention due to their critical role in India’s agriculture sector, which remains largely insulated from external shocks.
Capital goods companies backed by infrastructure push
Stocks linked to infrastructure and manufacturing, including Larsen & Toubro Ltd. (L&T), KEC International, and Siemens Ltd., are also on analysts’ watchlists. These companies benefit from strong order books supported by Indian government investment, shielding them from global market swings.
“Capital goods firms are relatively less vulnerable to geopolitical disturbances due to long-term domestic projects and clear execution pipelines,” Srivastava noted.
Markets remain choppy, but experts urge calm
While Indian markets opened lower on Friday, falling about 0.7% on both the Sensex and Nifty indices, analysts said the correction was muted compared to what might typically be expected during such crises. Strong GDP growth forecasts, easing interest rates, and continued FII participation have contributed to this stability.
India’s air defence forces reportedly intercepted over 50 Pakistani missiles on Thursday night and downed four enemy aircraft, signalling the seriousness of the situation. Nevertheless, the Indian market’s reaction was described as controlled, with foreign investors remaining net buyers—injecting over ₹2,000 crore on the day of the missile attacks.
Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi, said technical indicators remain strong for several stocks, including HAL, BEL, Mazagon Dock, ICICI Bank, ITC, Bharti Airtel, and Reliance.
Context: Historic resilience of Indian markets in conflict scenarios
Historically, Indian equity markets have displayed the ability to recover swiftly following brief periods of geopolitical tension. Previous India-Pakistan stand-offs, such as those in 1999 and 2019, saw limited and short-lived market corrections.
Experts believe this pattern could repeat, particularly if the current conflict remains contained and macroeconomic fundamentals stay robust. “Avoid panic selling,” said Devarsh Vakil, Head of Prime Research at HDFC Securities. “Remain invested, hedge wisely, and wait for clarity.”
For now, investors are advised to prioritise quality over speculation and maintain a diversified portfolio across stable sectors. Despite the tensions, the Indian equity landscape continues to offer opportunities for cautious optimism.
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