The ongoing conflict involving Iran, the United States, and Israel has unsettled global financial markets. Oil prices have surged, currencies have seen sharp swings, and equity markets have turned volatile
as investors grapple with a situation that shows little sign of de-escalation.
Such periods of uncertainty inevitably raise a familiar question for investors: should portfolios be repositioned during a geopolitical crisis? Most financial advisers argue against reacting to daily headlines, instead emphasising disciplined asset allocation and diversification as the most effective way to navigate turbulence.
Views, however, remain divided on tactical moves. Some suggest using the correction to selectively add large, high-quality stocks that have cooled off from elevated valuations. Others advocate holding cash and waiting for clearer signals before deploying capital.
The anxiety is also visible in investor behaviour. A sharp rise in SIP stoppages, with the ratio touching 100% in March, reflects growing caution amid volatile equity markets. Yet, the broader trend tells a different story. Even as some investors pause systematic investments, equity mutual funds continue to attract strong inflows, and interest in equities and ETFs remains intact.
This divergence highlights a key dilemma—whether to step back during uncertainty or stay invested and use volatility as an opportunity.
For those looking to deploy fresh capital (Rs 50,000 to Rs 2 Lakh) but wary of geopolitical risks, experts broadly recommend a measured approach: avoid extreme calls, stay diversified, and phase investments rather than trying to time the market.
Volatility is part of market cycles, not a signal to exit
Market experts caution against reacting to short-term disruptions. Manish Srivastava, Executive Director, Anand Rathi Wealth Limited, said, “It is always a good time to invest. Investors should establish a long-term strategy which they should stay anchored to, and not react to short-term market movements.”
He emphasised that investors should continue putting money to work despite the uncertainty. “If funds are available, investors can do a lump sum investment and stagger it across 6–8 weeks to ride the volatility better. If one has regular income, they can do an SIP into diversified equity mutual funds.”
Srivastava also highlighted that such volatility is not unusual. “The Nifty 50 has seen an average drawdown of nearly 18% every year and recovers in a little over a year… post this fall, the next one year has seen returns of 32%, and the next three years around 20%.”
His advice is clear: “Investors should not wait for complete clarity or an ideal entry point… the earlier you start, the more you allow compounding to work in your favour.”
Don’t go all-in—stagger your investments
With global uncertainties persisting, experts advise against lump-sum investing in one go.
Santosh Meena, Head of Research at Swastika Investmart Ltd, said, “Staying on the sidelines can be more costly than the risk of a market dip… but avoid all-in lump-sum entries and instead use a staggered approach over 4–6 months.”
He added that this approach allows investors to benefit from lower valuations while maintaining a buffer if markets face further shocks.
Equity, mutual funds or ETFs—what should you choose?
There is no single “safe” option in the current environment.
Adhil Shetty, CEO, Bankbazaar, said, “There is no single safer option in the current market… the decision should depend on comfort with volatility and the ability to stay invested through cycles.”
He noted that while direct equity requires close tracking, mutual funds and ETFs offer diversification, especially when sectoral performance is uneven. “A staggered allocation is more relevant at this stage than choosing one product over another,” he added.
There are, however, differing views on the preferred route. Meena favours index ETFs for their low cost and diversification benefits, particularly in uncertain times. In contrast, Srivastava believes equity mutual funds are more suitable for most salaried investors. “They are actively managed and provide diversification, allowing investors to navigate volatile phases without having to track markets closely,” he said.
He also emphasised the role of SIPs in building long-term wealth: “Equity mutual funds allow disciplined investing through SIPs… an investor putting Rs 20,000 per month for 15 years at 13% returns can build a corpus of over Rs 1 crore.”
Diversification beyond equities is critical
Volatility is not limited to equities alone.
Ankur Punj, MD & Business Head, Equirus Wealth, said, “Recent volatility is not limited to equities; we have seen volatility in gold as well.”
He recommends a balanced allocation across asset classes—including equities, gold, multi-asset funds and cash—to manage risks while staying prepared for opportunities. He also noted that current valuations are relatively attractive, making the risk-reward favourable for equities over the medium term.
The bottom line: Stay disciplined, not reactive
The spike in SIP stoppages appears to be driven more by sentiment than fundamentals. While geopolitical tensions and oil price movements may continue to drive near-term volatility, the consensus among experts remains clear—avoid panic-driven decisions.
Continue SIPs, stagger fresh investments, and maintain diversification across equities, mutual funds, ETFs and other asset classes. In uncertain times, disciplined investing—not market timing—remains the most effective path to long-term wealth creation.
