With last-minute U.S. mediation, cooler heads prevailed between India and Pakistan. But a flare-up is inevitable.

India and Pakistan engaged in the most intense fighting in decades with four days of escalating conflict that included fighter jets, missiles and drones packed with explosives. It ended almost as abruptly as it began.

The first word of the truce came from President Trump, who announced that the two countries had reached a "full and immediate ceasefire," after talks mediated by the U.S.

Shilpak Ambule, India's high commissioner to Singapore said that "everybody is on operational alert. But that does not mean that our India growth story and focus on economy gets affected." His comments come against the backdrop of tensions between India and Pakistan,

PM Modi stated that India will not distinguish between the government that sponsors terrorism and the masterminds of terrorism

After the announcement of a ceasefire between India and Pakistan, Jammu and Kashmir is beginning to return to normalcy after a tense spell. The authorities announced that schools and colleges in parts of the Union Territory will reopen from today.

In such a scenario, where Pakistan faces an existential threat, or believes that its territory is about to be overrun, it may decide to “go nuclear”—even at the risk of self-destruction. The latest test of this pattern arose in the aftermath of a terrorist attack in Indian-Administered Kashmir on April 22.

Analysts believe that if the current stability holds over the next 24–48 hours, with no retaliatory actions or escalatory rhetoric from India or Pakistan, the stock markets are likely to respond constructively.