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US-Israel tensions with Iran have rattled markets, surging oil prices. NSE and BSE indices saw sharp swings. Experts advise patience, diversification, and long-term allocation.
The broader message: discipline, diversification and patience matter more than panic.
Escalating tensions in the Middle East following the US–Israel strike on Iran and the killing of Iran’s Supreme Leader have rattled global markets, with crude oil prices surging and risk sentiment turning fragile. Back home, benchmark indices on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE) have witnessed sharp swings, as investors reacted to rising geopolitical uncertainty and fears of higher inflation driven by oil.
At this point, investors, experts suggest, shouldn’t panic but keep themselves patient. Market experts said that while near-term turbulence may persist, history suggests Indian equities tend to recover once risks are priced in.
Volatility May Persist, Say Experts
Amandeep Singh Uberoi, Founder and CIO of Creencia Consulting, told Business Standard that the recent correction reflects a sharp repricing of geopolitical risk amid escalating Israel–Iran tensions, rising crude prices and a broader global risk-off shift.
Markets, he said, had been positioned for relative stability, making the adjustment swift and disorderly. Uberoi cautioned that this may mark the beginning of a sustained period of elevated volatility rather than a one-off reaction. In such phases, purely long-only strategies often struggle due to sharp swings, sector rotations and correlation spikes.
He advised investors to diversify beyond traditional long-only portfolios and consider risk-managed, hedged and non-directional strategies to navigate drawdowns while aiming for more consistent returns across cycles. While India’s structural growth story remains intact, disciplined capital allocation and strategy diversification will be critical in the months ahead, he said.
Oil: The Immediate Transmission Channel
A note by Axis Mutual Fund, reviewed by Business Standard, highlighted that the most direct impact of the conflict on India would be through crude oil. India imports over 80 per cent of its oil requirements, with nearly half of those shipments passing through the Strait of Hormuz — a key global energy artery now under stress.
Higher crude prices pose upside risks to inflation and the current account deficit, which in turn could pressure the rupee and bond yields. In the near term, oil-sensitive sectors such as aviation, paints, cement and chemicals may face margin pressures.
However, historical precedent offers some comfort. During the 2022 Russia–Ukraine war, Brent crude briefly surged past $100 per barrel, yet Indian equities managed to absorb the shock and eventually revert to fundamentals.
Nifty 50: A Record of Resilience
Over the past 15 years, conflict-driven drawdowns in India have typically been shallow and temporary, market data show:
Crimea crisis (2014): Despite geopolitical tensions, Nifty 50 delivered around 31 per cent returns that year.
Balakot episode (2019): Minimal lasting impact; Nifty ended the year with roughly 12 per cent gains.
Russia–Ukraine invasion (2022): The index fell about 5 per cent on invasion day but finished the year in positive territory.
Operation Sindoor (2025): Initial jitters gave way to stability as risks remained contained.
The pattern suggests that while headlines trigger sharp reactions, fundamentals tend to reassert themselves over time.
Anchor to Asset Allocation
Nehal Meshram, Senior Analyst at Morningstar Investment Research India, told Business Standard that geopolitical tensions are often short-lived and should not prompt reactive portfolio changes.
He advised investors not to panic sell during dips, as such moves often lock in losses just before stabilization. Instead of trying to time the bottom, meaningful corrections should be used as opportunities for gradual rebalancing.
Meshram recommended maintaining long-term asset allocation across equities, debt and gold. Diversification, he said, helps cushion shocks — debt instruments provide stability when equities come under pressure, while gold can act as a hedge during uncertainty.
For investors with ongoing SIPs and long investment horizons, continuing steady investments and focusing on portfolio quality rather than short-term tactical trades makes sense, he said. Within equities, a defensive tilt toward large-cap diversified funds and well-managed flexi-cap or multi-cap strategies may help manage downside risk, while avoiding excessive exposure to small-cap or narrow sector themes during volatile periods.
Multi-Asset as Structural Hedge
Varun Gupta, CEO of Groww Mutual Fund, told Business Standard that geopolitical risks are now a recurring feature of the global backdrop. The best way to handle abrupt sentiment shifts is through a clearly articulated risk framework, he said.
Gupta pointed to Multi-Asset Allocation Funds, which invest across equities, debt and commodities such as gold and silver. Such diversified exposure can offer a natural hedge during periods of heightened uncertainty, while maintaining participation in equity markets for long-term growth.
History suggests that the market impact of geopolitical shocks is often short-lived, and investors should not meaningfully alter long-term asset allocation solely because of headlines, he added.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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March 03, 2026, 17:23 IST
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