In the wake of the recent Pahalgam terror attack and heightened tensions between India and Pakistan, Indian stock markets have shown the most amazing resilience. The Nifty 50 and BSE Sensex have not only withstood the geopolitical storm but have managed to post gains. This is a very good sign for investor confidence. Even on May 7, when Indian forces executed Operation Sindoor targeting terrorist hubs across Pakistan and Pakistan-occupied Kashmir, Indian indices closed in positive territory. Such performance over the last month really underscores the depth of India’s Economic strength.
Pakistan’s KSE 100 Plummets Under Pressure
By contrast, the Karachi Stock Exchange in Pakistan has suffered investor jitters. Since cross-border hostilities between India and Pakistan have picked up, going back to April 22, the KSE 100 index has tumbled over 6 percent. On the day of Operation Sindoor alone, it was down more than 5 percent during trading before recovering some losses to close the day only 3 percent lower than the previous day. Not only does the index reflect fears over events in Pakistan and the possible escalation of tensions with India, it also once again calls attention to the KSE’s own chronic problems. Since the KSE essentially closed after the results were announced from the election in early May, it has now only opened twice; given the current environment, it’s possible that international investors may have the KSE on a watch list for heightened risk.
Historical Trends Reinforce India’s Stability
Historical events have shown that the Indian markets have been resilient when confronted with issues of a geopolitical nature. Research done by Anand Rathi and Bajaj Broking reveals that during past confrontations, like the Kargil conflict or the Balakot air strike, Indian indices only fell back marginally. And those pullbacks were largely attributed to factors affecting the global markets, with the Indian market being part of that global ecosystem.
The starkly different market reactions arise from very different kinds of economic health. India, the world’s fifth-largest economy and on track to soon surpass Japan, enjoys rapid growth, sustained public investment, and healthy domestic consumption. By contrast, Pakistan suffers from really poor economic health, as suggested by weak key indicators: high inflation, currency volatility, and a dependency on IMF bailouts.
Moody’s recently said that prolonged tensions would likely derail Pakistan’s modest recovery, putting fiscal consolidation at risk and access to foreign financing in jeopardy. But India’s macroeconomic stability, notwithstanding significant geopolitical headwinds, looks pretty much as it has always looked, and is bolstered by recent foreign institutional investment of the kind that hasn’t been seen since 2021.
The emerging market story is a well-worn one. When investors get nervous, they seek the shelter of economic strength. And what demonstrates the most economic strength is the fundamentals.
Concerns have been raised that the recent escalation between India and Pakistan could shake foreign investment sentiment. However, analysts suggest the actual impact may be muted. India’s economy, now valued at USD 4 trillion, has minimal direct trade with Pakistan, limiting immediate financial exposure. In fact, despite cross-border missile strikes grabbing headlines, local equity, currency, and bond markets showed almost no reaction. Investors seem to be betting that the situation is unlikely to lead to a full-blown conflict. Considering this, Ajay Marwaha, head of fixed income of the Nuvama Group, said that the broader investment landscape might well remain unaffected.
Historical Resilience of Indian Markets
India’s past tiffs with its neighbors offer some comfort. Take, for example, the 2019 India-Pakistan flare-up. After that kerfuffle, the rupee held its ground against the dollar, and yields on Indian bonds saw a very modest rise after which they promptly headed downward. Or consider the Galwan Valley clash with China in 2020. The rupee weakened a fraction after that incident, which was an intense fight, but quickly stabilized.
Domestic Strength Balances External Caution
The robust domestic market of India serves as a buffer from capital market volatility linked to global geopolitical events. Portfolio flows to India are only temporarily affected, even by major external developments like military conflicts or massive natural disasters.
On net, India has recently seen substantial foreign investor participation in its domestic capital markets. By adding to their existing holdings in the domestic equity markets, foreign institutional investors increased their overall exposure to Indian equities to USD 889 billion as of May 2023. Despite a modest pullback in the Indian rupee in the first quarter of 2023, the local equities being held by these foreign investors delivered a currency-adjusted return of 12% from 2022 to early May 2023.
Focus on Trade Deals and Structural Reforms
India’s immediate conflict notwithstanding, its long-term investment appeal is rooted in trade and economic reforms that are going in the right direction. Just days ago, a milestone free trade agreement with the U.K. was finalized, and discussions with the U.S. for a bilateral pact are progressing nicely, with many suggesting for the global slowdown and trade dispute resolution to be seen as a great opportunity for India.
These two developments, along with India’s plans to lower tariffs on raw materials in order to encourage the kind of manufacturing that goes with a truly ‘Make In India’ reality, are pivotal for growth. And that makes the short-term jitters that are affecting the stock market a much lesser worry.
Turbulence has struck Pakistan’s financial markets in April, with border tensions between India and Pakistan growing to a peak that hasn’t been seen in years. A deadly terror incident in Jammu and Kashmir that left more than 27 people dead has caused diplomatic relations to go even further downhill between the two nuclear neighbors. Pakistan’s Information Minister has warned that military engagement could be right around the corner, which has sent investor anxiety levels up and stability-seeking capital flowing out of the country’s financial markets.
Pakistan’s financial instruments are suffering as a result of the geopolitical backdrop. The country’s dollar bonds have fallen almost 4% in April, and its equity markets have dipped nearly 3%. Foreign capital is stepping back, and local market sentiment is deteriorating, which makes the situation look even worse.
Divergence Between Indian and Pakistani Markets
Even as political uncertainty weighs down Pakistan’s markets, Indian financial instruments remain resilient. This month the domestic equity and bond markets in India have achieved positive returns, standing in stark contrast to their neighbors to the northwest. The Indian economy, bolstered by relative political stability, seems to have insulated its capital markets from the fallout of border skirmishes.
This contrast highlights an emerging trend: risk-averse capital is flowing away from Pakistan, where political tensions and fears of conflict have reached new heights. Fund managers and analysts say that unless there is a rapid easing of hostilities, the Pakistani stock market will see continued capital outflows and valuation pressures, which will in turn accelerate the widening performance gap between it and the Indian stock market.
A Reversal From Recent Optimism
Prior to the latest friction, Pakistan’s fiscal future was looking brighter. The nation had notched up its finest stock market show in over 20 years just the previous year, a performance driven by, among other factors, dropping oil prices and ascending credit ratings. And with those moves, there seemed to be a gathering interest among investors, a nascent stabilization of sorts.
This progress has now been stalled. What was once seen as a window for growth and capital inflow has shifted into a period of re-evaluation and caution. Although some market observers still maintain a constructive view on Pakistan in the medium term, the short-term outlook has become clouded by the possibility of further instability and external shocks, such as newly imposed US tariffs.
Opportunities Amid the Downturn?
In spite of the current sell-off, some analysts are expressing what can only be called potential silver linings. Avanti Save of Barclays Bank, for instance, notes that the recent slump in bond prices “might create attractive entry points for long-term investors.” Her firm continues to hold an overweight position on Pakistan, banking, as she says, on the notion that geopolitical risk may be short-lived and that economic fundamentals may eventually reassert themselves.
Some, like Thomas Hugger from Asia Frontier Capital, believe that any kind of real recovery will depend on how quickly the tensions ease. If there’s a diplomatic breakthrough, or even just a stabilization in the media rhetoric, confidence from investors could rebound modestly, allowing both stocks and bonds to recover some of the ground that they’ve lost.
The location and often poor quality of the cricket stadiums used for the Twenty20 Men’s World Cup 2024, particularly in the United States, have already drawn criticism. The International Cricket Council (ICC) planned the Twenty20 World Cup 2024 in the United States and the West Indies to boost cricket in the United States, but the choice has been heavily questioned due to concerns over the quality of the venues and facilities. Regardless of their fruitless choice of host country, the ICC is still making money off of cricket because it is one of the most watched sports in the world. India is the largest market for cricket in terms of market size, viewership, sponsorships, and advertisements. As a result, last year at the ICC Annual Conference in Durban, South Africa, the governing body proposed a revenue model for the 2024–27 cycle that would see India receive nearly 40% of its event’s share. An estimated $230 million would be distributed to the Indian board from the $600 million yearly pot for the next four years, while the exact amount was not specified by the ICC. This works out to about 38.5% of the ICC prize going to the BCCI.
T20 World Cup Schedule Designed Keeping India at Centre
Being the revenue center of ICC, India enjoys the privilege of being a prime focus. The USA and West Indies are co-hosting the T20 World Cup right now, and games happen at different times of the day. In an interview with a well-known news outlet, West Indies Cricket Board (WICB) CEO Johnny Grave said that the schedule was made with the Indian time zone in mind because “majority of the revenue from ICC event comes from one market.”
In addition, he discussed the many advantages for the West Indies and its associate nations of hosting important ICC events and the assurances offered to Windies players that they will not play international cricket during their busy schedules with the Indian Premier League and the Champions League. Only the top three nations have hosted the major men’s events over the past eight years. Currently, the majority of the world’s best cricketing nations are hosting ICC men’s events. The T20 World Cup is being hosted by the United States and the West Indies, while the Champions Trophy will be hosted by Pakistan. Tri-nation India, Sri Lanka, and Bangladesh will co-host New Zealand and Australia later this year. The men’s Cricket World Cup of 2027 will be co-hosted by South Africa, Zimbabwe, and Namibia. Africa will play home to the 2027 Men’s Cricket World Cup, according to the International Cricket Council (ICC). This means a significantly larger number of members will get a portion of the host board’s revenue compared to the last eight-year cycle. Before, the top three would keep the money they earned from their host broadcasters and use it to further their already substantial economic advantages in their home regions.
Revenue of the International Cricket Council Distributed to National Cricket Boards Worldwide From 2016 to 2023
India vs Pakistan Matches: The Biggest Money Minter for ICC
Although many sports fans claim that the Ashes is the most profitable competition for the ICC, this is completely untrue. When two archrivals like India and Pakistan square off, it’s guaranteed to be a great matchup for spectators and sponsors alike.
As a financial spectacle, these matches showcase the economic powerhouse they have become in the world of cricket, with figures approaching billions of dollars. At the Asia Cup in 2023, both teams played against each other, and the game was shown on TV after buying television rights worth about $100 million. The enormous significance of these matches was highlighted by the fact that a 10-second advertisement during the India vs. Pakistan match cost over INR 25-30 lakhs. As the tournament approached, rumors began circulating that the most expensive ticket to the Twenty20 World Cup 2024 match between Pakistan and India had risen to an astounding $22,000.
ICC reveal historic prize money for the Men’s #T20WorldCup 🤩
A wide range of sponsors, including worldwide sponsors, social media sponsors, and category-specific sponsors, are secured by the International Cricket Council (ICC) for their yearly events.
It is projected that each sponsor will give anywhere between $30 and $40 million to the ICC.
The logos and adverts of the sponsors are displayed prominently in a variety of spots throughout the stadium as well as on the ground.
A large fee is paid to the media for them to telecast ICC matches. The company then generates revenue through ad sales or partnerships with other businesses. Many companies have put a lot of money into getting media rights for the Indian market because most Indians love cricket. Fantastically, this could lead to even bigger revenues for them.
Advertising revenue for Disney Star, the official media rights holder for the ICC Men’s T20 cricket World Cup this season, is projected to be about INR 1,600-1,800 crore, which is similar to what they made for the previous event in Australia two years ago. All signs point to the broadcaster’s advertising roster reflecting the present Indian Premier League. Despite still being in the process of finalizing arrangements and having sold approximately 40% of its advertising spot inventory, Disney Star expects to attract big sponsors such as those seen in the BCCI-backed cricket competition IPL.
Tickets and Merchandising Adding More to the Revenue
Thanks to its worldwide fan base, the ICC World Cup has generated a tonne of money for brands. Beyond the cricket pitch, the tournament has a wide appeal, and fans are searching high and low for mementos that will allow them to cheer on their favorite teams and players. The World Cup has sparked a massive demand for items, which is great news for businesses, cricket fans, and the economy as a whole.
World Cup apparel gives fans a physical way to show their support and enthusiasm since they want to feel like they’re a part of the event. Fans are lining up in droves to get their hands on official team jerseys and hats with emblems so they may proudly represent their team during games.
The fluttering of flags and banners is another trademark of the games. In a vibrant display of support, fans can be seen adorning stadiums, homes, and even cars with these icons of national pride and team love. There is a wide selection of flags sold by stores near stadiums, from huge national flags to smaller ones with team emblems.
FAQs
What are the revenue streams for the ICC T20 World Cup 2024?
The main revenue streams for the ICC T20 World Cup 2024 include sponsorship, Merchandising, ticket sales, and India Vs Pakistan Matches.
Who is the official media rights holder for the ICC Men’s T20 Cricket World Cup 2024?
Disney Star is the official media rights holder for the ICC Men’s T20 cricket World Cup this season.
What is the prize money for the winners of the ICC T20 World Cup?
The winners of the ICC T20 World Cup to get at least $2.45 million (INR 20.36 cr).
