Despite ongoing geopolitical tensions with Pakistan, foreign investors remain largely optimistic about the Indian equity market, according to Vinod Nair, Head of Research at Geojit Investments. This confidence stems from a combination of strong domestic fundamentals and encouraging global cues.

Nair noted that investor confidence has been boosted by sustained foreign institutional inflows (FII) and record Goods and Services Tax (GST) collections in April, signaling strong underlying economic resilience. So far this month, foreign investors have infused ₹14,167 crore into the Indian equity market.

Recent events, including reports of missile launches and cross-border hostilities, initially triggered market volatility and a "risk-off" approach from traders. On May 9, 2025, Indian stock markets experienced a significant tumble, with both the BSE Sensex and NSE Nifty 50 closing with losses exceeding 1%. The India VIX, a measure of market volatility, surged over 8%, reaching its highest level since April 8.

However, according to Nair, the domestic market sentiment has not been dampened by the escalation in tensions between India and Pakistan. He projected a short-lived confrontation, citing India's advantages and Pakistan's economic situation.

Analysts suggest that while geopolitical developments, particularly tensions with Pakistan, will remain in focus, investors will also closely monitor key macroeconomic data releases, including the Consumer Price Index (CPI), Wholesale Price Index (WPI), and trade figures for exports and imports. Furthermore, the corporate earnings season will continue to influence market sentiment, with major companies like Tata Steel, Bharti Airtel, Gail, Hero MotoCorp, Tata Motors, Lupin, and BHEL scheduled to announce their quarterly results.

Historically, India has demonstrated resilience during geopolitical tensions. An Anand Rathi report indicated that, with the exception of the Parliament attack in 2001, Indian markets have generally seen corrections of no more than 2% during periods of conflict with Pakistan.

While short-term investors may experience some anxiety, experts advise retail investors to avoid impulsive decisions based on geopolitical events. Market downturns caused by such tensions have historically been temporary, and long-term investors may find opportunities to accumulate quality stocks during market dips.

Overall, while the India-Pakistan situation introduces a degree of uncertainty, the Indian equity market's strong fundamentals, coupled with continued foreign investor confidence, suggest a positive long-term outlook.