Excerpts:
Q. How are Indian equity markets reacting to the current geopolitical situation?
Puneet Sharma: Globally, a lot is happening in quick succession—constant news flow, unexpected events—so markets are reacting rapidly. Indian markets, in particular, have responded positively despite recent volatility. Take yesterday, for instance—there was uncertainty when the market opened, and no one really knew how things would unfold. The equity markets are closely tracking global developments. Expectations around corporate earnings get quickly factored into share prices. It’s an exciting time for those on the sidelines, but it can be tricky for active investors navigating through the volatility.
Q. What about the global picture? How do you think the Iran-Israel conflict and the US involvement are impacting global equity markets?
Puneet Sharma: The most immediate impact is on crude oil prices, which we’ve seen spike recently. Since much of the world’s oil supply flows through the Iran region, any disruption causes risk for shipping routes. That fear is reflected in oil prices. In India, oil marketing companies saw a sharp fall yesterday but bounced back today, most are up around 2.5%. Events like these trigger short-term volatility and impact investor sentiment globally.We’ve seen this earlier too, when the U.S. announced tariffs and the India-Pakistan conflict escalated, volatility spiked with 2–2.5% swings in the Indian indices. But now, with the ceasefire between Iran and Israel, we expect this turbulence to be short-lived. Markets should stabilize, and the focus will return to economic fundamentals and growth.
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Q. While wars are unfortunate, some sectors do benefit during such times. Which sectors could outperform while this geopolitical chaos plays out?
Puneet Sharma: It’s a tough call. Initially, we saw a broad sell-off, triggered partly by FIIs pulling out money, which also led to INR depreciation. IT, for example, felt the heat due to forex impact on margins. However, as stability returns, IT could see a recovery.Oil and energy remain directly impacted. Auto is another sector to watch, fuel price hikes haven’t yet hit retail prices hard, but if crude crosses $75 a barrel, it could eventually dent demand, especially for auto companies. Still, this might be temporary.In the long term, this episode might just be a footnote. So, I’d advise investors not to try timing the market. If you’ve built a long-term, curated portfolio, stay invested and trust the process.
Q. What are some 2025 themes to watch? Based on domestic factors, which sectors or types of funds should retail investors consider?
Puneet Sharma: Monsoons are expected to be average or slightly better, which bodes well for rural demand. Historically, when rural incomes rise, FMCG benefits significantly, so I’d bet on FMCG.
The government’s tax relief for those earning up to ₹12 lakh a year also increases disposable income. Combine that with monsoon-driven demand, and you have a strong case for both FMCG and entry-level auto, especially two-wheelers and budget cars.
Automobile ancillaries should benefit too. Another theme is insurance—health and life insurance demand is picking up as financial awareness grows.
Q. For someone entering the markets in 2025, how can they build an “all-weather” portfolio that withstands both geopolitical and domestic turbulence?
Puneet Sharma: Investors today have access to highly diversified options. For an all-weather portfolio, I recommend starting with ETFs like Nifty 50 or BSE 500. These provide broad exposure across sectors and include large-, mid, and small-cap stocks.
BSE 500 even includes emerging companies that could turn into multibaggers. ETFs are a great way to gain diversification without stock-picking. But remember, no portfolio is completely immune to market corrections. There will be dips like we saw in October 2024 or March 2025.
The key is to stay invested through those phases. Equity investing is not about overnight returns; it’s about wealth creation over time. Patience is everything.
Q. Would you recommend a specific asset allocation ratio for medium to high-risk investors right now?
Puneet Sharma: At Whitespace Alpha, we’re focused on long-term capital appreciation via equities, so our fund is 100% equity. But I believe a 60:40 split between equity and debt is healthy for most medium to high-risk investors. It provides some cushion while allowing meaningful equity participation.
For more aggressive investors, a higher equity allocation makes sense.
Q. What should investors do right now? Should they rebalance or wait it out?
Puneet Sharma: My advice is to stay the course. If you’ve done your research, believe in the companies you’re invested in, and understand their business fundamentals, don’t react to short-term events.
Timing the market rarely works in the long term. Many studies confirm that even missing just a few good days can significantly impact your overall returns. Rather than trying to exit at the top and re-enter at the bottom—which is often just guesswork—stick with your long-term philosophy.
If something fundamentally changes about a company or sector, by all means, reassess. But don’t make investment decisions solely based on short-term events or noise.
Disclaimer: Recommendations, suggestions, views and opinions given by the experts/brokerages do not represent the views of Economic Times.
