Q) Geopolitical tensions seem to be escalating across regions. How should global investors interpret these developments from a macro and market perspective?
A) Since the beginning of the conflict on Feb 28, 2026, domestic indices have witnessed a broad based decline. Nifty 50 Index declined 7%, Nifty Midcap 150 declined 8% while the Nifty Smallcap 250 declined 7%. Valuations across market caps have declined from peak.
Crude oil prices have exceeded USD 100 per barrel, briefly touching USD 108 which is generally inflationary. While India imports 88% of its oil requirements, its dependence on oil for GDP growth has been declining. Petroleum products which accounted for ~37% of total imports in 2014 have reduced to ~26% in 2025.

We assign a moderate probability for the conflict to prolong. We expect markets to recover post temporary impact of geo-political tensions. India’s economic fundamentals remain robust despite external shocks. Fiscal and monetary policy measures have helped India’s economic resilience and GDP growth is expected to exceed 7% in FY26. We expect corporate earnings recovery in FY27, which should attract FPI buying, a reversal of recent trends.

Q) Historically, markets tend to react sharply to geopolitical shocks but recover quickly. Is it time to diversify globally and which markets are looking attractive?
A) India’s equity market has witnessed several phases of geo-political crisis but has consistently recovered. For example, during the Iraq war in 2003, the Nifty 500 index declined 11% till the end of June 2003.

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Thereafter, the index delivered positive 44% over the next 1 year. The global financial crisis of 2008 led to the Nifty 500 index decline about 58% till the end of 2008. Over the next 1 year, the index delivered 91% returns. Thus, history tells us that periods of crisis are temporary and investors should not panic during volatile times.
Investors usually have a home country bias when investing. However, diversifying globally allows investors to participate in opportunities which may not be available in domestic markets. Developed markets like US provide opportunities in areas of innovation and emerging technologies like artificial intelligence.Emerging markets overall outperformed developed markets in 2025, and we still see a strong case for investing in them.

Emerging markets remain undervalued, underappreciated, and under-owned by many investors. Investors should diversify across geographies to participate in global growth opportunities while reducing downside risks.

Q) How could rising crude oil prices and commodity volatility reshape the global investment landscape?
A) Brent crude which was trading at around USD 67 per barrel in mid-February 2026 has risen about 50% to USD 100 per barrel, briefly touching USD 108 per barrel. According to RBI, a 10% jump in global crude oil prices could push India’s retail inflation up by 20 basis points and reduce GDP growth by 20 to 25 basis points.

India’s dependence on oil for growth has been declining. Oil required to generate a unit of GDP has declined by 27% over a decade. So, India is in a better place compared to many of the previous price spikes owing to which the impact from a moderate rise in energy prices can be absorbed.

The challenge this time, has been less on the price of oil and more on the actual availability of oil due to supply disruptions.

This has caused cuts to industrial production and operation of restaurants. Recent developments like US allowing India to purchase Russian crude oil for the next 30 days and Iran allowing Indian ships to transit through the Strait of Hormuz would help mitigate energy supply disruptions.

The disruption to physical supplies should also push India to pursue ways to sustainably reduce dependence on imported crude oil and gas as well as diversify supply sources. The current situation is likely to accelerate such efforts and provide possible opportunities.

Further, sectors like healthcare, financial services and technology present opportunities for global investors amid the present volatility. More importantly, having a well-diversified portfolio both geographically and based on asset classes is the better approach during volatile periods.

Q) What role does rebalancing play during volatile periods when asset prices move sharply due to geopolitical shocks?
A) Rebalancing plays a critical role especially during volatile times. It is during bull and bear phases of the market that asset allocations get skewed. During market corrections like we are now witnessing, the share of equity in an investor’s portfolio declines while the share of other asset classes like debt rises.

Rebalancing the portfolio during such phases helps restore the prescribed asset allocation. In the long run, this helps the investor maintain the asset allocation of the portfolio aligned to her risk appetite and potentially earn optimal risk adjusted returns.

Q) How can investors achieve better asset allocation across equities, debt, gold, and international markets?
A) Diversification is a fundamental tenet in investing. Diversifying one’s investment across various asset classes helps reduce downside risks and allows investors to benefit from low correlation between multiple asset classes across market cycles. Predicting market cycles is a dangerous proposition.

Investing in different asset classes separately could be expensive and inefficient from a tax perspective for most investors. Mutual funds provide avenues which invest across equity, debt and commodities in a single portfolio in the most tax efficient manner.

These are hybrid funds, such as Balanced Advantage Funds or Multi Asset Allocation Funds, which are managed by professional fund managers where the asset allocations are dynamically managed based on changing market conditions.

Another important layer of diversification is geographic diversification. Mutual funds investing in global markets provide an avenue to diversify globally. This allows investors to take global exposures with low investment amounts.

Q) Which global themes—such as technology, semiconductors, or global indices—do you believe investors should track in the current environment?
A) Technology and semiconductors are long term global themes broadly associated with artificial intelligence and energy transition. Healthcare and financial services are relatively less impacted by current geopolitical events and provide long term global opportunities for investors as well.

Q) Ideally what percentage of capital should be diversified globally for someone who is 30-40 years? And if someone wants to deploy fresh capital what would you advise?
A) Global investments are not just diversifiers but also help investors meet their future foreign currency goals like child’s education or travel. An investor may allocate 10 to 20% of her portfolio to global funds depending on the type of goal. Taking a SIP or STP route to investing would help stagger her investments.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)