Can one really make money in the market during a war?

INDIAN investors were humming tunes from the epic British musical Oh, What a Lovely War! when stocks were massively boosted by the Kargil War against Pakistan in 1999 and when the bourse saw a smaller increase during terrorist attacks in Mumbai in 2008.

But airstrikes by India against terrorist camps in Pakistan late last month rattled markets, and the song turned sombre.

The broad conclusion that short wars can be good for markets is not always supported by history. By all indications, a longer war would devastate the two countries' economies.

Indian markets rose 38 per cent in less than three months during the Kargil War in Ka…