Risk aversion is reflected in asset classes. Asian markets witnessed sharp declines, with Japan’s benchmark falling sharply while Hong Kong and China’s main indices also fell. Futures for Indian equities signaled a weak start as investors reacted to negative global cues and uncertainty surrounding the path of conflict.
Market participants say the biggest concern now is that the conflict, which many initially believed would be short-lived, could drag on for a long time and cause widespread economic disruption. According to Rajiv Aggarwal from Doordarshi India Fund, the consequences will be particularly severe if oil prices remain high for a long period of time.
“Initially, this war was expected to be short, but things are getting worse day by day,” Agarwal said, warning that tight oil markets could quickly spell trouble for many economies, including India.
The sharp decline in global issues has left investors with an important question: whether to protect capital by booking profits or use corrections to deploy fresh money.
Rather than an emotional reaction to volatility, Agarwal emphasized the importance of portfolio diversification. “In such circumstances we rotate our capital,” he said, explaining that investors should gradually sell stocks that appear to be overvalued and reinvest the proceeds in companies that have become more attractive after the correction.
He noted that periods of widespread market depression, often pushing prices lower across all sectors, create opportunities for long-term investors willing to look beyond near-term distress. Finance, for example, may not be directly affected by rising oil prices compared to other sectors of the economy.
“Financials will certainly feel the impact if the economy slows down, but the damage can sometimes be exaggerated in such market conditions,” he said, adding that this is where investors can best “cherry pick” opportunities.
Another topic he highlighted is renewable energy. With oil prices rising, the push for alternative energy sources could gain momentum, especially in countries like India that rely heavily on energy imports. Investing in renewable energy can benefit from the current global backdrop, he said.
Even so, Agarwal cautioned against trying to time the market’s bottom right. “It’s very hard to know when the dust will settle,” he said. He noted that unexpected developments can quickly change the direction of the market.
Instead, he advocates a conservative investment strategy — keeping some cash while gradually investing in a market downturn. Investors should “start holding positions” that have been forced while making sure they maintain enough liquidity to act on future opportunities.
In an environment where geopolitical shocks and energy markets create volatility, the strategy for investors may not lie in predicting future market movements, but in remaining patient, disciplined and prepared to shift capital as opportunities arise.
