Investors stick to India's story, dwarfing its growth prospects, while people get along with geopolitical fears.

The latest tensions in the Indian market with Islamabad shrugged after New Delhi encountered several targets in Pakistan-controlled territory during a military operation earlier on Wednesday.

"Structural reforms, resilient domestic demand and strong macro fundamentals continue to provide compelling cases," said Mohit Mirpuri, equity fund manager at SGMC Capital.

"Investors may pause for a while, but that doesn't make India's trajectory a key allocation in emerging markets," Mirpuri added.

The market also appears to have gained support from progress in trade negotiations with major trading partners, including a free trade agreement with the UK on Tuesday.

Radhika Rao, a senior Singaporean economist at DBS Bank, said the country is expected to be one of the first companies in the region to reach a bilateral trade agreement with the United States.

“Despite the increased geopolitical tensions with Pakistan, India’s assets will remain fairly controlled,” Johanna Chua, global head of emerging market economics at Citi, told clients shortly after India’s strike.

Chua said there was a historical precedent in her team’s views following the Pulwama attack and pointed to investors’ reactions in 2019, after which 40 Indian security personnel were killed in an ambush, leading to a strike against Pakistan’s managed territory.

Despite election year and lower interest rates, the money market is "quite included" with Indian government bond yields in the 15 basis point range.

Predicted at the same time Some knee-length market reactions, investors hope to quickly reduce the possible limiting consequences.

After the military operation, India's share price almost slumped, down slightly at the previous session.

The benchmark Nifty 50 and BSE Sensex have barely changed, and so far the tension between the two nuclear-weapon countries has not disturbed investors. Although if the conflict escalates, experts do not rule out sharper market impacts.

Kranthi Bathini, head of equity strategy at Wealthmills Securities, said Indian stocks may still see some volatility in the short term and then gradually recover.

"The key question is whether this turns into a mature conflict or is still a limited defensive strike," Bacini said. "The broader escalation may dampen investor sentiment, and the included responses may leave little traces in the market."

The rupee weakened by 0.33% to 84.562, while the rupee fell green in the depreciation between Asian currencies, although it still hovered at its three-month high near its three-month high.

India's 10-year benchmark government bond yields slightly below 6.339%.

“While the latest hot exchanges are more aggressive than the previous episode of 2019, we still think this will end with a downgrade in the coming months.” Darren Tay, head of risk at BMP in Asia Pacific, said investors should generally be bullish on India.

But others warned that the current environment is much worse than the 2019 attacks.

Tom Miller and Udith Sikand told CNBC that “the situation on the border is still very smooth. The scope and scale of this Indian military operation is much larger than in 2016 or 2019. In turn, this suggests that Pakistan will be more pressing “proportionate” response than before.

They added: "With that being said, the overnight reaction of Indian asset prices to the event shows that investors do not expect an endless cycle of military retaliation."

India's operation comes after last month's radical attacks in Pahalgam, Jamu and Kashmir, 26 of them were killed.