Investing during war times and geopolitical crisis
Investment opportunities during war and geopolitical crisis
Let’s start with a question
“Who likes war or geopolitical crisis?” - I am sure your answer will be no, and we hope the world will have peace and happiness.
But still, those happen over time. Wars significantly influence global financial markets, often triggering immediate, profound reactions and long-term economic shifts. The market becomes more volatile as the war deepens, impacting various sectors.
In the recent personal consultation sessions, a repeated question was asked by everyone:
What should we do during wartime? Should we stop investing, wait for the right opportunity, or continue to invest more?
🛡️ Historically, certain investment avenues have proven resilient during periods of war and conflict.
Precious Metals - Read more about
Gold: Safe haven; prices typically rise during conflict.
Silver & Platinum: Offer protection against inflation and currency risk.
Government Bonds
Treasury Bonds: Low-risk, stable returns; favoured by conservative investors in uncertain times.
Defense Stocks
Companies supplying military equipment often benefit from increased government spending during war.
India’s surge in defence spending (10 %+ annually).
Real Estate
Property in politically stable areas retains value, offers rental income, and long-term appreciation.
What Is The Impact Of War On Equity Markets?
Let’s look at the impact of the Nifty 50 during the War and Geopolitical crises from 1999.
Key Observations:
Pattern Analysis:
Initial Shock: Most geopolitical events cause an immediate 5-15% decline in the Nifty 50
Recovery Time: Typically ranges from 2-18 months, depending on severity and resolution
Market Resilience: Indian markets have shown increasing resilience over time to geopolitical shocks
Severity Categories:
Severe Impact (>15% decline): Kargil War (1999), Global Financial Crisis (2008-09), COVID-19 (2020), Russia-Ukraine War (2022)
Moderate Impact (5-15% decline): 9/11 (2001), India-Pakistan Standoff (2002), Mumbai Attacks (2008), Recent tensions (2025)
Limited Impact (<5% decline): Iraq War (2003), Balakot Strikes (2019), Israel-Hamas War (2023)
Recovery Patterns:
Quick Recovery (1-3 months): Balakot Strikes, Recent regional conflicts
Medium Recovery (4-8 months): 9/11, Iraq War, Uri Attack
Extended Recovery (>12 months): Global Financial Crisis, COVID-19, Major wars
Investment strategy
Let’s think specifically about Indian retail investors and adopt defensive moves and an opportunistic investing approach.
Flight to Safe-Haven Assets
During geopolitical tensions, investors tend to flock to "safe-haven" assets like GOLD, Government Treasury Bonds. Indian retail investors particularly favour gold during uncertain times, as it has historically been viewed as a store of value in Indian culture.
Defence Sector Interest
India’s surge in defence spending (10 %+ annually) is a good sign, and this sector could become a good investment thesis during wartime and if the war deepens.
Diversification Strategy
That’s the key, as always, you do not want to lose sleep over these crises and have a good diversified portfolio, which would take care of this volatility.
The Indian stock market has demonstrated increasing maturity and resilience to geopolitical shocks over the years, with more recent events showing relatively quicker recovery periods compared to earlier crises.
In the current crisis also I would also ask everyone to utilise this opportunity to invest via a lum - sum and do not stop SIP.
Happy Investing.