Is Dalal Street really scared of war? Here’s how Sensex performed during the 1999 Kargil conflict

History shows that markets can surprise, Sensex delivered massive returns during the 1999 Kargil conflict while global peers lagged. Here’s what traders and investors must know.

War and stock market: Do wars crash markets or create opportunities?

As war fears resurface globally, Dalal Street veterans are asking: Is it time to panic or pounce?
Flashback to 1999, when India fought the Kargil War from May 3 to July 26, the Sensex jumped 37 per cent, stunning everyone. Global markets like the S&P 500 rose just 2 per cent and even gold fell by 11 per cent during the same time.

Timeline of Kargil War

• May 3, 1999: Pakistan’s infiltration detected

• May 5, 1999: Capt. Saurabh Kalia captured; Kargil conflict begins

• May 26, 1999: Indian Air Force launches air strikes

• July 26, 1999: India’s victory is declared

Sensex, Nifty rally hard

During the 84-day war:

• Sensex soared 37 per cent (from 3378 to 4687)

• Nifty Next 50 rose 25 per cent, Nifty 500 up 34 per cent

• Gold Futures dropped 11 per cent, bucking safe-haven trends

The Indian stock market proved resilience even during national crises, outperforming global peers by a wide margin.

Which stocks, sectors dominated the rally?

• Tata Motors zoomed 92 per cent

• Auto, engineering, mid-small caps outperformed

• Banking sector remained rock solid

Quality large-cap stocks led the way as investors preferred companies with strong balance sheets and leadership.

Was it a smooth rally or were there speed bumps?

• Sharp correction seen from May 20-28, 1999

• Sensex fell 12.5 per cent in 8 days

• However, the index recovered completely before the war ended

Quick dips were buying opportunities, not reasons to panic.

Post-war market performance: Sensex stayed strong

• 1 week after war: Sensex down -2.4 per cent

• 1 month after war: +4.43 per cent

• 3 months after war: +5.32 per cent

Markets remained in an uptrend, proving that India’s economic story was bigger than short-term noise.

Investor playbook during wartime markets

Zee Business Research recommends:

• Traders: Keep positions light, expect volatility

• Investors: Treat sharp falls as golden buying opportunities

• Stay invested in quality stocks with strong earnings visibility

History shows wars have triggered corrections  but smart investors who stayed put reaped big rewards.War fears create volatility, but India’s market strength often shines through. Kargil War proved that confidence, not fear, builds long-term wealth.