Geopolitical tensions between India and Pakistan kept the Indian equity markets on tenterhooks after Indian Air Force carried out air strike on terror camps in Pakistan. However, Adrian Mowat, emerging markets (EM) equity strategist, does not expect market to react strongly to these geopolitical tensions.

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"The medium-term impact of such strikes on capital markets is very modest unless things escalate," Mowat said in an exclusive interview to CNBC-TV18.

The S&P BSE Sensex fell nearly 500 points in intra-day while the broader Nifty50 lost over 100 points. However, the frontline indices have recovered from the opening lows.

According to Mowat, the investors would become a little bit cautious in the short-term, but long-term investors have seen such incidents between India and Pakistan earlier.

"These tensions do not have an impact on earnings that drive the share price of companies and therefore, investors would likely take this newsflow in their strides," said Mowat. The news of air strikes is unlikely to impact investments into India, he added.

Keeping the attack aside, Mowat remains very bullish on India. “India is still a very much wait and see market – as you wait for general elections there might be some modest move in stocks due to individual dynamics,” he said.

“We continue to see big divergence in performance particularly in financials but as of now still looks like more of defensive market with sectors like IT continuing to do well and if there is reduction in trade tensions and get a more mature view around visa allocation as part of reduction in trade tension then Indian IT space should benefit from that,” he added.

First Published:Feb 26, 2019 1:00 PM IST