Headlines in newspapers---

1.  ‘US strikes Iran’
2. Sensex plunges over 1,000 points.
3. Crude oil prices jump over 8 per cent’.
4. Crude prices can touch $200

Naturally market reacted with a sharp decline. However, the knee jerk reaction may not be correct. Market factors uncertainty and when uncertainty rises, stock prices go down.

A geo-political crisis like the current one may initially signal end of the world and businesses. However, this is not the truth, but far from truth.

History has shown that big fall do happen in short term but the recovery is also quick.

The table below lists the past geo- political events and how the market has responded,

 

Date	Event	Peak fall that month (%)	1-year Return (%)
20 March 2003	US-Iraq war	(-) 8%	60
13 September 2008	Delhi Blasts	(-) 15	18
26 November 2008	Mumbai Attacks	(-) 19	82
20 February 2014	Russia-Ukraine war	(-) 2	45
28 September 2016	URI Surgical strike	(- ) 4	12
26 February 2019	Balakot Air Strike	(-) 4	10
5 May2020	Galwan Incident	(-) 5	58
24 February 2022	Russia Ukraine War	(-) 9	7

The above table shows that while the period immediately following the geo-political event is volatile, over next 1 year or so market smartly recovers & posts strong gains. Markets tend to price fear quickly while long term returns are driven by broader economic forces.

The final word: -

Geopolitical crises are inherently unpredictable and can send shockwaves through markets in the short term. Prices often react quickly as investors grapple with uncertainty. Yet history shows that these declines are frequently temporary, with markets tending to recover and revert to their longer-term trends.

To cut the long story short—lage raho with your investments. Ache din aayenge.