Knee-jerk reaction: yes, but do wars impact equities significantly? Here is the data

Stock market today: Equities are risky assets; hence, any turbulence or geopolitical tensions see investors dumping the stocks and rushing to safe-haven assets such as gold and government bonds. There have been several instances where the stock market has seen knee-jerk reactions by investors after an untoward development. Today, stocks across the globe, including India, tumbled in early trade. Both Sensex and Nifty declined nearly a per cent in opening deals after media reports that Israeli missiles had hit a site in Iran.

Oil prices, too, spiked in the international market. 

However, a study shows that wars or conflicts do not impact markets significantly. As per an analysis by Zee Business Research team, the market logs good growth three to 12 months after the war begins. 

Here is a look at US' S&P 500 and India's Nifty50 index's performance after a war

The table shows that during the Israel-Palestine War (which began on October 7, 2023), the S&P 500 surged 20.80 per cent in six months while India's Nifty50 jumped 14.60 per cent. 

Further, the study also showed that during the Iraqi invasion of Kuwait, which began on August 2, 1990, the 30-share index Sensex rose 14.7 per cent in one month, 20.4 per cent in three months, declined 7 per cent in six months, but logged a 52 per cent rally in 12 months.

What do technicals say about Nifty50 index?

Nifty erased intraday gains to extend its losing streak to the fourth session on April 18, thus recording the worst losing streak since October 26, 2023. At close, Nifty was down 0.69 per cent or 152.1 points, at 21,995.9. The Nifty showed considerable intra-day volatility on April 18 before closing lower. A long bear candle was formed, negating the minor bullishness of the previous session. In the process, the down gap formed on April 16 was filled by the intraday bounce, making way for a further down move. It could now head towards 21,905 and 21,710 on the downside, while 22148-22214 bands could offer resistance soon, said Deepak Jasani, Head of Retail Research at HDFC Securities.