The holding ceasefire since the May 2025 four-day conflict, which followed a Pahalgam terror attack and featured Indian missile and drone strikes under Operation Sindoor, has anchored trader sentiment toward low probabilities of renewed Indian military action. Bilateral ties remain strained with frozen diplomacy, limited backchannel talks, and Indian officials reiterating decisive responses to provocations, while Pakistan maintains readiness against escalation. Persistent risks stem from militant activity in Kashmir, where security forces stay on alert, alongside moderate assessments of conflict potential in 2026 tied to unresolved territorial disputes and annual nuclear-site notifications. No major diplomatic breakthroughs or new triggers have emerged in recent months to shift the equilibrium.