The world's first drone war between nuclear-armed neighbours has erupted in South Asia. On Thursday, India accused Pakistan of launching waves of drones and missiles at three military bases in Indian territory and Indian-administered Kashmir - an allegation Islamabad swiftly denied.

The specter of a major military confrontation looms over South Asia once again, following a deadly terrorist attack in India-administered Kashmir that claimed 26 lives, sparking tensions between the nuclear-armed neighbors,

Indian shares fell on Thursday in their most volatile session in a month after the country said it "neutralised" attempts by Pakistan to "engage" several military targets in its northern and western regions.