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As the conflict between India and its neighboring country Pakistan is escalating, many investors are concerned about its impact on their mutual fund investments.
Since the Indian Army carried out the Operation Sindoor, both the key indices – SENSEX and Nifty have fallen by more than 1000 points and 400 points, respectively, a marginal fall of 1% in two trading days.
Cafemutual spoke to a few industry experts to understand what distributors should tell their clients in this situation:
Anupam Tiwari, Head - Equity, Groww MF
Anupam said that equity as an asset class is more sensitive to geopolitical uncertainties, which is why it is important for investors to have patience.
Tiwari hopes that the current situation between India and Pakistan will be normalized soon and reassures that India is a powerful economy, so there is no major risk. In fact, he advises MFDs to encourage clients to use the current market volatility to add more equity to their portfolios or continue with their existing investments.
Balvir Chawla of Finnovators Services, Pune
Chawla said despite the current market volatility due to the India-Pakistan conflict, India's long-term growth story is still intact. He is telling his clients not to get worried. He also believes that the current conflict may present some opportunities for people to invest. He recommends investors to top up their SIPs or use STP.
Col Sanjeev Govila (Retd), Founder of Hum Fauji
Sanjeev said while initial market reactions indicate confidence in India's economic resilience, investors should remain vigilant, disciplined and strategically prepared for potential volatility ahead.
To deal with the upcoming volatility, investors should diversify their investments across asset classes and avoid panic selling.
DP Singh, Deputy MD & Joint CEO, SBI MF
Singh said that the war will be a short-term disturbance, and the investors should not read too much in it. His suggestion to MFDs is to tell clients that they should not press panic button because this conflict will not be a long-term phenomenon.
Key action points
- Tell investors to stay invested and not do panic selling
- If possible, tell them to add exposure to equity funds
- Do asset allocation to reduce risks
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