While India’s benchmark Nifty50 has slipped 1.4% since the Operation Sindoor on May 6–7, Pakistan’s KSE-100 has plunged nearly 10% during the same period. Since the April 22 attack in Jammu and Kashmir that killed 26 tourists, Pakistan’s benchmark index is down 13.5%, while the Nifty has declined just 0.57%.
The divergent market reactions reflect a fundamental reality: India’s stock market is nearly 245 times larger than Pakistan’s and significantly more resilient to geopolitical shocks.
India ranks among the world’s top five equity markets with a total market capitalisation of around $5 trillion. Pakistan’s Karachi Stock Exchange, by comparison, stands at just $20.36 billion, according to Bloomberg data.
Beyond size, India’s market also has greater depth. It hosts over 5,000 listed companies, supported by robust participation from mutual funds, retail investors, and systematic investment plans (SIPs). This domestic base helps absorb volatility. Pakistan’s market, with just over 500 listed companies, is far more sentiment-driven and illiquid—making it more vulnerable to sharp drawdowns during political instability.
India’s broader macroeconomic strength adds another layer of resilience. The country holds $688 billion in forex reserves, compared to Pakistan’s $15.25 billion. Meanwhile, India’s GDP is projected to double from $2.1 trillion in 2015 to $4.27 trillion by 2025, according to the International Monetary Fund (IMF).However, Moody’s Ratings this week trimmed India’s GDP growth forecast for 2025 to 6.3%, down from 6.5%, citing rising global uncertainty and trade restrictions. The agency also flagged the escalating geopolitical tensions with Pakistan as a potential risk to growth.Still, Moody’s expects India to rebound to 6.5% growth in 2026, following an estimated 6.7% expansion in 2024. In its Global Macro Outlook 2025–26, the agency highlighted that businesses and investors globally are adjusting to shifting geopolitical dynamics—raising costs and tempering expansion plans.
In this environment, geopolitical risks—particularly in South Asia—remain a headwind. However, the disparity in market responses shows that while India is not immune, it is far better equipped to weather the storm.
However, the ratings agency has retained India’s growth forecast at 6.5% for 2026, following an estimated 6.7% expansion in 2024.
Also read: Mutual fund SIP inflows hit record high of Rs 26,632 crore, up 3% in April
In its Global Macro Outlook 2025-26 (May Update), Moody’s pointed to a broader global slowdown driven by heightened US policy uncertainty, trade tensions, and financial market volatility. The agency noted that global investors and businesses are recalibrating their strategies in response to shifting geopolitical dynamics, which is likely to increase costs and weigh on investment and expansion decisions.
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.
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