Russia launched a military offensive on Ukraine, making markets across the world jittery. Indian market was not immune as benchmarks corrected 5 per cent on Thursday trade after Russian President Valadimir Putin announced military action against Ukraine. The impact was such that all stocks on barometer indices turned negative amid massive sell-off.  

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As the volatility rose, investors resorted to panic selling, pulling down the Nifty below 16,300 and the Sensex corrected by more than 2700 points.  

"This is a time when investors will be tested for their patience and discipline. Markets are choppy and will probably remain this way for some time, but that should not deter a serious investor," says Nitasha Shankar, Head PRS Equity Research, YES SECURITIES.

However, there are several reasons that investors should stay put in this market and do not get affected by the Russia-Ukraine war. Market experts and analysts are of the view that the correction was very much due and investors can look for long-term perspective and use this opportunity to buy quality stocks as it offers good entry point. 

Why should investors stay put in this market?

Well, there are many reasons, but to start with, it has been observed that the markets have recovered rather strongly post war-like situations on most of the occasions than it corrected.  As per a Zee Business research report, on an average in six big instances, headline US index Dow Jones have declined more than 11% in a war-like situations, while reacting rather sharply, benchmark Nifty have corrected by 16.5% in one year.  

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Strong recovery post war-like situations

Interestingly, the recovery is equally strong as Dow has gained nearly 7% in 3 months, 12% in six months and around 11.5% in 12 months.  

In terms of recovery post war-like situation, the Nifty has given better returns as the benchmark had yielded 23% premium in 3 months and 34% in six months. However, It has averaged out in 12 months and gave a return of 13.5% in one year.  
Out of the six such scenarios analyzed, there had been only two occasions when the Dow (American market) gave a negative return in 3 months.  
Comparing the six months scenario, Barring Pearl Harbor attack, markets have generated massive returns on other 5 instances, said Singhvi.

Long-term view remains bullish

"We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was due where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the major concerns for equity markets and geopolitical tension is increasing the risk of inflation as energy prices are rising," says Parth Nyati Founder, Tradingo.

He said such geopolitical issues provide a good buying opportunity for long-term investors and we are in a structural bull run that is likely to continue for the next couple of years where intermediate corrections will be part of this journey.

The other 5 reasons 

Nitasha of YES SECURITIES also feels that investors should not panic and go long on India. She lists five reasons for her optimism in the Indian markets

1. Balance Sheets stronger-than-ever: India’s corporate health is the strongest in a long time. Deleveraging has been seen across sectors and cash reserves have surged. As a result corporate confidence is high.  

2. Promoters are optimistic about the business potential: This reflects in the increasing promoter holding in NIFTY 500 over time, increasing from 32% to 45% over the last decade. Interestingly, post-Covid, promoters have increased stake by ~3%  

3. Private capex cycle is making a comeback: Public capex is still strong with the Government giving an impetus even in the recent Union Budget.  

4. China plus one strategy helping drive demand in specific sectors: PLI scheme is a big game changer that is encouraging and supporting domestic production.  

5. Green energy transition for India is opening up a whole new investment opportunity for the investors  
"Moving in and out of investments based on undue reliance on recent performance is likely to result in excessive trading and inferior performance results. This is the time to revisit the basics, have confidence in the long-term potential of India and remain invested in the same," she adds.  

Good entry point

Naveen Kulkarni, Chief Investment Officer, Axis Securities, also feels geopolitical events often come up with short-term reactions in the market as the dominant news flow leads to market volatility.  

"We believe the present macroeconomic developments are leading to volatility in all major asset classes, including equity and debt. The volatility is here to stay for some time before we conclude a market direction. Investors should focus on asset allocation and use this volatility to build long-term positions in quality large and mid-cap stocks, says Kulkarni.

Amar Ambani, Head – Institutional Equities, YES SECURITIES, says we reiterate our bullish stance on Indian equities for next three years. "History has shown us that these wars offer good entry points for investors. Be it the wars of Vietnam, Gulf, Afghanistan, Iraq or the Crimean crisis, markets have fallen on war fear, then rallied when the actual battle broke out and further continued its upward journey post the war. The next 7-odd trading sessions will offer tremendous opportunities for the long-term investor. Invest in good quality management in sunrise sectors” says Ambani.
 
Where should investors find an opportunity in this correction?

Speaking of where investors should look for opportunities amid Russia-Ukraine situation, Parth Nyati says Long-term investors look for buying opportunities from lower levels where the domestic economy facing sectors like capital goods, infrastructure, real estate, financials should be on investors' radar.

"Technically, Nifty has slipped below its 200-DMA which may lead to further weakness towards the 16000 level, while 16400 is an intermediate support level. We can expect a bounce back from the 16000 level but confidence will be back only if Nifty manages to cross the 17200 level. If Nifty breaks the 16000 level, then the worst-case scenario could be 14,000," he adds.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says buying should be confined to stocks/ segments which are fairly valued or have good earnings visibility. He remains bullish in the IT sector.  

"IT, though highly valued, is a sector whose prospects are steadily improving. There are instances of promoters buying stocks of IT companies. This is an indication of better-than-expected results from the sector. Investors can use sharp market corrections to slowly accumulate high quality stocks in IT," says Vijayakumar.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)