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Indian Stocks Show Resilience Through 15 Years of Global Conflicts

A report by Axis Asset Management highlights the resilience of Indian equities over the past 15 years despite major global conflicts. It notes that while geopolitical tensions trigger short-term volatility, they have not led to sustained underperformance, especially when conflicts remain regional. The analysis shows a consistent pattern where conflict-driven market drawdowns are temporary, and fundamentals reassert themselves over time. The Chief Investment Officer advises long-term investors to stay invested, diversify, and use market declines as opportunities to add to holdings.

Key Points: Indian Equities Resilient in Global Conflicts: Report

  • Conflict-driven market declines are shallow and temporary
  • Long-term returns depend on earnings and domestic demand
  • Panic selling often misses subsequent recoveries
  • A consistent pattern of resilience over 15 years
2 min read

Indian equities have proven resilient despite major conflicts in 15 years: Report

A 15-year analysis reveals Indian stock markets consistently bounce back after geopolitical crises, advising long-term investors to stay invested.

"Over the past 15 years, every major conflict has tested sentiment and almost every time, Indian equities have proven resilient. - Ashish Gupta"

New Delhi, March 2

Despite major conflicts globally, Indian equities have proven resilient over the past 15 years, a report said on Monday.

Whenever geopolitical tensions rise, domestic equity benchmarks witness sharp corrections - whether during Operation Sindoor or the 2011 Middle East unrest.

Despite significant declines in the Indian stock market during such events, Indian equities have consistently bounced back and demonstrated resilience after major global conflicts or wars, according to a report by Axis Asset Management.

The key takeaway for investors who panic and sell their equities during conflicts such as the ongoing US-Israel-Iran tensions is to understand how the Indian stock market has historically performed during major geopolitical crises.

Amid the US-Israel-Iran war, global equity markets have shown negative performance following missile strikes.

Historically, this pattern has repeated several times over the past 15 years. Wars and geopolitical conflicts typically trigger short-term market volatility, but they have not resulted in sustained equity underperformance, particularly when conflicts remain regional, according to the note.

The pattern is consistent: conflict-driven drawdowns tend to be shallow and temporary, while longer-term returns are dictated by earnings growth, liquidity, and domestic demand.

It also noted that the US-Israel-Iran conflict is a serious geopolitical event, but for Indian investors, it is not unprecedented.

"Over the past 15 years, every major conflict has tested sentiment and almost every time, Indian equities have proven resilient. Markets may fall, currencies may weaken, and oil prices may spike. But fundamentals reassert themselves over time. For long-term investors, the most reliable strategy during geopolitical stress has remained unchanged: stay invested, diversify sensibly, and use periods of decline to add to existing holdings," said Ashish Gupta, CIO, Axis Mutual Fund.

Moreover, investors who exited equities during earlier conflict-driven sell-offs frequently missed the recoveries that followed sometimes within a relatively short span, he added.

- IANS

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Reader Comments

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Priya S
While the long-term resilience is true, we must acknowledge that these "shallow corrections" can wipe out a significant portion of a middle-class family's savings if they need the money urgently. The advice to "stay invested" assumes everyone has a long-term horizon, which isn't always the case.
R
Rohit P
Absolutely spot on! The strength of the Indian economy and our domestic consumption story is what provides this cushion. Global events cause a knee-jerk reaction, but our fundamentals are strong. This is why SIPs are a blessing for common investors.
S
Sarah B
Interesting perspective from an Indian fund house. The report's focus on domestic demand as a key driver makes sense. In many other markets, recovery is more dependent on global trade resuming. India's large internal market seems to be a real advantage during global crises.
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Vikram M
The mention of "Operation Sindoor" and 2011 Middle East unrest brought back memories! The key takeaway for young investors: don't check your portfolio every day during a crisis. Let the fund managers do their job. Panic selling is the only sure way to lose money.
K
Karthik V
Good analysis, but I wish the report also touched upon the impact on sectors like IT and Pharma which are more export-dependent. Their resilience might differ from banks or FMCG. A bit more nuance would help in making sector-specific decisions during volatility.

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