Nifty Performance During the Kargil War (May–July 1999)

Hello everyone, 

At the time, I was relatively new. When war talks started, the Nifty was at 1090, and it had dropped 15%. Despite intraday volatility, the Nifty continued to rise when the real fight started. When the conflict finished, it rose from a low of 980 to 1300.

By March 2000, the Nifty had risen to 1800. Recall that it wasn't a full-scale conflict. Note that it will take some time for the government to respond. Let's leave this to the policymakers, although I'm confident something significant could happen this week.


Personally, I think that's sufficient. The government ought to act fully. However, this can also make us anxious in the market. Be ready and take care of your finances.

Backdrop:

• Kargil War: May 3, 1999 – July 26, 1999
• Tense geopolitical situation between India and Pakistan
• Uncertainty initially rattled the markets

Nifty Movement:

• In May 1999, as news of infiltration and conflict broke, the market declined modestly.
• Nifty traded around 980–1020 levels back then (keep in mind — the index levels were much lower than today due to market cap growth and index recalibrations since).
• There were sharp intraday swings and volatility as battle updates came in.
• Despite initial nervousness, the market recovered strongly even before the war formally ended.

By July 1999:

• Nifty rallied sharply as India gained strategic upper hand
• Sentiment turned positive as confidence in military success grew and economic fundamentals remained intact

Key Reasons for Quick Market Recovery:

• The war was localized and short-lived, with limited long-term economic impact.
• Foreign Institutional Investors (FIIs) maintained steady flows into Indian equities.
• Domestic economic reforms and good corporate earnings supported the market.

Conclusion:

While the Kargil War did create short-term volatility, the Nifty was resilient and ended higher by the time hostilities ceased. It reaffirmed how markets often price in geopolitical risks swiftly, and shift focus back to economic and corporate fundamentals once uncertainties clear.

When you have an enemy — whether in politics, business, or personal life — you must eliminate them completely if you decide to strike. Leaving them standing, even weakened, gives them a chance to recover, gather their strength, and seek revenge. If conflict is inevitable, your best move is to be thorough and final.

Why It Matters:

• A defeated enemy often harbors resentment and waits for the right time to strike back.
• Half-measures can backfire: mercy might be seen as weakness, giving them motivation to retaliate.
• Power thrives on certainty — leaving threats unresolved creates instability around you.