Operation Sindoor: War or war-like environment with Pakistan can pull markets down

Indian equity markets will remain volatile and continue reacting to daily triggers, according to Manoj Trivedi, Director of Strategy at Maxiom Wealth. In an interaction with Business Today, the market watcher said a war or war-like environment with Pakistan can pull markets down, irrespective of market cap category, although large-caps can be relatively more resilient.

The benchmark equity index BSE Sensex traded marginally in the red amid rising tensions between Indian and Pakistan after India’s armed forces conducted Operation Sindoor, targeting terrorist infrastructure in Pakistan. The 30-share index was down 33 points, or 0.04%, at 80,608 at around 9.20 am (IST).

Trivedi further added that factors such as the announcement of the India-US trade deal, Q4 GDP numbers, and ongoing corporate earnings will also dictate the market trend going ahead. “We expect markets to be relatively flat with a slight downward bias in the near term,” he said.

The market is already into the fifth month of 2025, and it has been a roller-coaster ride for market participants. On a year-to-date basis, the Sensex has gained 3% till May 6. On the other hand, the BSE Midcap and BSE Smallcap indices tanked 9% and 15%, respectively, during the same period.

“Given the uncertainties related to Tariffs, India’s retaliatory action in response to Pahalgam terrorist attack, announcement of macro numbers will all have an impact on the markets. Given India’s strong macro indicators, we should be seeing Indian markets resume their upward journey,” he said.

Trivedi follows a bottom-to-top approach. “Our algorithm first picks companies across sectors and we then look at the sectors to which they belong and how they are likely to perform in the given environment. Having said that, Defence, BFSI, electronics, auto ancillaries and select companies in the technology space are looking good to us, given their fundamentals,” the market expert said.

He further highlighted that asset allocation is very important and varies for each investor based on his/her risk profile. “For our clients, we recommend a LSG strategy, essentially allocating funds into 3 buckets of liquidity, safety and growth. Just like a balanced diet, having different asset classes serve different objectives. Fixed Deposits are ideal to fill your liquidity bucket, while PF or gold offer safety and stability. Investors must be clear that funds committed for the growth bucket are for the long term. One needs to be patient and maintain calm to ride out the associated volatility,” Trivedi said.

Asked how to invest Rs 10 lakh in this market, he explained that the allocation of Rs 10 lakh will depend on investor’s risk profile, types of assets already held and value thereof, financial goals for which the investments need to be made and the time horizon. Within the broad asset classes, the choice of sub-asset classes will also depend a lot on the investor’s profile.

Sharing his views on precious metals and fixed income products, Trivedi said that gold and silver to keep going up over time. Even if one buys these assets at high prices, such investor can home to earn decent returns over the long term.

“Fixed Income products are probably the best instruments to fill your liquidity bucket. Fixed deposits provide the benefit of certainty, but one must not expect high returns. Investing in debt funds is subject to interest rate risk,” he added.