The markets have been stabilized after Operation Sindoor but uncertainties remain regarding the oncoming of a full-blown war. Even in the case of active war, we can look at historical trends to guide our way forward.

When India has faced conflicts in the past, our markets have always bounced back stronger. During the Kargil War in 1999, stocks initially dropped about 8% as panic set in, but ended that same year with impressive 15% gains. Defense and infrastructure companies did particularly well. Later standoffs with Pakistan in 2001-2002 brought similar patterns – initial drops followed by recoveries, with pharma and tech companies serving as safe bets during uncertain times. By 2016, our markets had matured significantly, barely flinching during the surgical strikes with just a small 1.6% dip that recovered within weeks.

The lesson? War brings temporary panic and selling, creating good buying opportunities for patient investors. Companies with strong fundamentals tend to weather these storms best, while defensive sectors provide shelter until the situation stabilizes.

During tides of war, some sectors and industries perform quite well while others succumb to pessimism and some remain unchanged. Here is a breakdown of the performance of sectors

• Defense – Defense stocks see a sharp incline as government budget allotted to this industry sees a hike when border tensions rise. During the 1965 Indo-Pak war, half of the government sanctioned budget went to defense and allied industries such as aerospace, engineering and ship building stocks. Companies involved in manufacturing arms, surveillance systems, and aerospace technologies are early beneficiaries and correct in due time.
• Printing and Publishing – Surprisingly companies involved in printing and publishing can rally as information becomes the need of the hour.
• Insurance – The general public is more inclined to purchase life insurance and medical insurance thus, insurance companies are also beneficiaries.
• Pharma And FMCG – stocks remain more or less stable or may even gain steadily as consumer demand for necessities does not fluctuate much.
• Travel, hospitality and allied industries – see a decline as individuals reduce spending and increase savings.

It becomes important to facilitate liquidity and manage risk during uncertain times, so here is how one can go about it:

• Shuffle your existing portfolio. Instead of completely pulling out of equity rebalance it by investing in sectors that perform well such as defence and insurance.
• Government backed securities also known as gilt funds are seen as a safe investment option as there is zero risk of default.
• Commodities like gold and silver make a dependable investment as they face lower volatility. Gold and silver are also quite liquid in nature thus supporting risk management.
• Investing in bond which have high liquidity even when the returns are low are one of the safest bets.

During tides of war, some sectors and industries perform quite well while others succumb to pessimism and some remain unchanged. Here is a breakdown of the performance of sectors

• Keeping an emergency fund:Investors must create an emergency fund that can take care of 6-12 months of expenses in the form of savings accounts in banks or fixed deposits. In case of unfortunate events these funds can be used as a financial buffer. It can also be used to avoid liquidating investments.
• Avoiding panic selling:Investors must avoid selling securities when fearful and panicked due to markets sliding. It usually leads to unnecessary losses. A patient investor trusts their decisions and is rewarded in due time.
• Take strategic profits:Mid and small cap companies that have short rallies do not sustain as there is no change in their fundamentals, one should consider partial profit booking in such scenarios.
• Be informed of misinformation:Rely only on credible sources of information such as announcements for RBI, ministry of defense communications and established financial institutions like CRISIL. Do not heed information available of social media platforms and maintain awareness.
• Seek a SEBI – registered Financial professional:One of the best courses of action when it comes to taking financial decisions and making investments is to take the advice of a professional. They understand the Indian market and are adept at analyzing market trends. A professional’s guidance can ensure the difference between a portfolio and a well-performing portfolio.

With over fourteen years of experience in wealth management and financial planning, our approach remains consistent even during market volatility.

We prioritize funds with experienced management teams and proven track records of navigating various market cycles. We conduct thorough evaluations of fund performance during previous geopolitical tensions, identifying which funds maintained portfolio stability while preserving long-term growth potential. This allows us to recommend funds that have historically demonstrated resilience.

We provide regular updates that explain market developments in clear terms, outlining potential scenarios and focusing on how your selected funds are positioned to manage current challenges based on their underlying holdings and management approach.

While recommending tactical adjustments to fund allocations, we maintain focus on your long-term financial goals, do no compromise on wealth creation over time. This balanced perspective has been key to our track record of wealth preservation.

To begin your wealth creation journey @ Contact Us

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