• AUGUST 11, 1999

Will the market open weak tomorrow?

The Indian Air Force shot down a Pakistani military plane flying inside Indian airspace. Indian Defense Ministry said that the Pakistani plane flew about six miles inside Indian territory in a marshy area that opens to the Arabian Sea.

Pakistani officials on the other hand averred that a naval patrol aircraft on a training mission was shot down inside Paisktani airspace, killing all 16 crewmembers abroad in a "totally unprovoked aggression".

This aircraft incident came just weeks after hostilities between India and Pakistan in the disputed Kashmir region came to an end.

News relating to the plane incident came in after the Indian market closed. It therefore did not affect the stock prices though the BSE Sensex closed with a decline of 45 points.

A peek at the GDR markets after the Indian market closed showed that most of the key stocks like Bajaj, ITC, BSES and Telco declined. However, traders at leading broking houses were of the opinion that this weakness was not related to this fresh tension between India and Pakistan. The market according to these traders was already weak before news of this incident filtered in.

While on its own, this fresh skirmish may not make the markets nervous, any attempt by politicians from India or Pakistan to make provocative statements on this issue will definitely unnerve the market. Already the Pakistani Foreign Minister, Sartaz Aziz has told reporters that "Pakistan reserves the right to make an appropriate response in self-defense". A few more statements like the one quoted above could trigger a sell-off at the bourses.

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