The big news of the day is that India has conducted surgical strike’s on the terror camps located inside the Pakistan occupied Kashmir. The DGMO of the Indian Army held a press conference at around 12 noon, and informed the nation that they had attacked around 7 terror launch pads the previous night and caused them heavy damages. As per the army each launch pad had around 25-35 terrorists along with Pakistan army men. Now you can calculate the probable number of casualties yourself.
As soon as the news was revealed by the DGMO, hell broke loose in the Indian Stock Markets. The Sensex and Nifty not only wiped off all the gains they were showing during the day, they got so terrorised of the news that both the indices closed deep in the red. Many in market actually feel that there may be a Nuclear war between India and Pakistan.
Many must be wondering what would happen in the markets now. We at VRIDHI know many would be confused about the situation and hence this article. But before coming to markets, let’s check on some crucial points.
Recently I had written my views on the ‘56 inches chest of PM Modi’ debate which public was engaging in, and the politicians were mocking at. These people were behaving like Emotional Idiots and wanted Modi to declare outright war on Pakistan.
The last sentence in the article read this : ‘This govt means action and looks like we will take measured actions’ You can read the full article here: https://emotionalidiots.com/2016/09/21/my-view-on-public-sentiment-on-56-inches/
Hence what we were anticipating from the government has happened exactly. Action in a controlled manner!
One more thing said in another article has also come out in expected lines. In the previous MarketFastFood article it was said: ‘Midcaps and Small Caps are on the costlier side hence caution is advised. No major correction is anticipated. On an index of 28000+ swift corrections of 5% to 10% should not cause any worries to us’ Read the article here: https://vridhi.co.in/2016/09/05/hold-on-to-your-investments-the-india-story-is-yet-to-unfold/
Sensex’s recent high was 29077 on 8-9-2016 and today it has hit a low of 27720, that’s a clean shave of 1357 points from the top which amounts to 4.67% meaning we may behave exactly as said in the above paragraph.
Now, let us come to the market and it’s likely movements in next few days. Those fearing that the situation may escalate and there can be a situation of nuclear war between the two countries may get a bit relieved after reading the below points. Yes, there would be some amount of escalation which Pakistan may do to save its face. Not that whatever we say can always come true, but we sincerely believe that things may not escalate to the levels of nuclear bombing!
*Firstly we need to be clear that India has not attacked Pakistan. India has just attacked the terror camps in PoK which actually belongs to India. Hence India has attacked terrorists in its own territory.
*India has neither attacked Pakistan or the civilians! Hence Pakistan can’t hope of help from China. China won’t risk being cornered by opposing strikes on terrorists!
*Thus if Pakistan tries attacking India the Indian army defeat them hands down.
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Now let’s check on the Nuclear War threat:
Pakistan had nuclear weapons even during Kargil war. Pakistan had then in same manner threatened to use them on India during Kargil, but instead of using them they surrendered to Indian forces.
In fact then American president warned then Indian PM Atal Bihari Vajpayee about this and said that usage of nuclear bomb by Pakistan can harm large part of India.
On this Vajpayee said: Let them use, if they take the first step of harming us with nuclear bomb we will make sure that entire Pakistan is wiped off in our next step!
Pakistan didn’t risk taking such insane step and I feel they won’t even now. Remember India has a No First Use Policy on nuclear weapons.
Hence we feel market will not take this situation too seriously for too long. We won’t be surprised if we see a recovery tomorrow itself and then further volatility before we settle down fully. Small escalations between the two countries can add another 5% volatility.
Mr. Vivek Karwa was on a business channel today where he was speaking about the stock IDFC Bank. We think you can use all opportunities which markets may throw up in next few days to buy few shares of the company for absolute long term. Read this also: https://www.facebook.com/vkarwa/posts/10207150602196259?pnref=story
We maintain our Target.1 and Target.2 and then again some volatility.
No country will dare to speak against India or against the strikes on the terrorists. Not even cunning China would dare!
Thanks and Regards
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