Stock Market Amid Indo-Pak Tension

On April 22, 2025, a devastating terrorist attack struck the Pahalgam region of India, claiming 26 lives. The brutality of the assault, where attackers interrogated victims about their religion—demanding Hindu or Muslim identification, forcing men to disrobe for verification, or compelling them to recite the Kalma—shocked the nation. Failure to comply resulted in execution in front of families. This heinous act not only broke the nation's heart but also fueled widespread anger, as it was clearly designed to sow hatred between communities.

Such attacks demand a resolute response. I believe India must take decisive and robust measures to send an unequivocal message to perpetrators: India is a strong, modern nation that will leave no stone unturned to protect its citizens. By demonstrating unwavering resolve, India can deter future acts of terror and reaffirm its commitment to national security.

How to Invest in War-Like Situations

War-like situations introduce uncertainty, causing stock market volatility that can unsettle even seasoned investors. However, history demonstrates that markets are resilient. With informed strategies, investors can navigate turbulence to protect and potentially grow their wealth. Geopolitical crises often trigger sharp sell-offs in equities as investors seek to mitigate risk, with stock prices typically declining as the likelihood of conflict escalates.

Not all sectors or assets are equally impacted. Wars can disrupt supply chains, spike commodity prices (e.g., oil), and shift capital toward safe-haven assets like gold and bonds. Conversely, defense and aerospace companies may experience increased demand, boosting their stock prices. Understanding these dynamics is critical to crafting a resilient investment strategy.

Strategies for War-Like Situations

1. Build a Diversified Portfolio

Diversification is the cornerstone of any resilient investment strategy, especially during heightened uncertainty. A well-diversified portfolio can reduce risk by up to 80% without significantly sacrificing returns. By spreading investments across asset classes, sectors, and geographies, you can cushion the impact of war-induced volatility. A balanced portfolio might include:

• Equities: Defensive sectors like healthcare, utilities, and consumer staples tend to remain stable, as demand for essential goods and services persists regardless of geopolitical events. Cyclical sectors, such as consumer discretionary or technology, may face greater volatility.
• Fixed-Income Securities: Bonds and fixed deposits offer stability during market downturns.
• Commodities: Gold and oil often perform well during conflicts due to safe-haven demand or supply disruptions.

During wartime, equities may experience short-term declines, but a diversified approach ensures long-term stability. Including global assets can further reduce exposure to region-specific risks.

2. Avoid Panic Selling and Stay Disciplined

Panic selling is a common mistake during war-like situations. Historical data shows that markets often recover quickly after initial sell-offs, rewarding investors who remain calm. To avoid emotional decision-making, adhere to a disciplined investment plan. Set clear financial goals, maintain a long-term perspective, and resist the urge to time the market. Regularly reviewing your portfolio with a financial advisor can reinforce confidence in your strategy.

3. Use Cost Averaging to Navigate Volatility

War-related news can trigger sudden market drops, making it challenging to pinpoint the best entry point. Cost averaging—spreading purchases over time—smooths out the impact of volatility. This strategy involves investing a fixed amount regularly, allowing you to buy more shares when prices are low and fewer when prices are high, effectively lowering the average cost per share.

In wartime markets, where sharp declines and recoveries are common, cost averaging is particularly effective. Conflicts often cause temporary market dips, offering opportunities to buy quality stocks at discounted prices. By accumulating more shares during these periods, you can enhance long-term returns.

4. Hedge Risks with Alternative Investments and Commodities

Sophisticated investors may use options to hedge wartime risks. Put options can protect against equity declines, while call options on commodities can capture upside potential. However, options trading requires expertise, so proceed with caution and consult a professional.

Wars often disrupt commodity supply chains, leading to price spikes in critical resources. For example, the Russia-Ukraine conflict drove oil prices above $130 per barrel and disrupted wheat, palladium, and natural gas supplies. Investing in commodities or related industries can be profitable but requires careful risk management. Consider:

• Oil and Gas: Stocks of companies like ONGC and IOC provide exposure to price surges during conflicts involving key producers.
• Gold: A traditional safe-haven asset that retains value during uncertainty.

Commodities are volatile, so limit speculative bets to a small portion of your portfolio and use stop-loss orders to manage risks. Exchange-traded funds (ETFs) focused on commodities can offer diversified exposure with lower risk.

Conclusion

Investing during war-like situations tests your discipline and foresight. However, with the right strategies—building a diversified portfolio, avoiding panic selling, using cost averaging, and exploring commodities—you can protect your wealth and seize opportunities. Historical trends show that markets often recover after initial turbulence, rewarding those who stay disciplined and informed. By maintaining a long-term perspective and adapting to market dynamics, you can build resilience and position your portfolio for growth, even in the face of uncertainty.