While markets continue to react to developments in the Middle East and global uncertainties, the downside appears limited, said Feroze Azeez, Joint CEO at Anand Rathi Wealth Limited, he expects a maximum correction of 5–7% in the near term, even if geopolitical conditions worsen. He further added that the indices will reclaim their previous peak over time.
He also believes the current volatile market environment is presenting selective opportunities, particularly in the small-cap segment, even as geopolitical tensions keep investors on edge.
Drawing parallels with the Russia-Ukraine War, Azeez said markets tend to react sharply in the early stages of a crisis but gradually stabilise as events unfold over time. “Any event that persists eventually stops shocking the market,” he told NDTV Profit, adding that the initial phase of the Russia-Ukraine conflict had a far more severe impact on equities than what is being witnessed currently.
Despite the ongoing volatility, Azeez remains confident about the broader trajectory of the market. He emphasised that earnings growth continues to support valuations and expects Nifty and Sensex to reclaim their previous peaks over time. “The market will re-establish its highs; the only question is whether there is a further dip before that,” he said.
From a strategy standpoint, Azeez made a clear distinction between investors and traders. He cautioned against aggressive participation in the cash market at this stage, given the sharp and unpredictable swings driven by news flow. Instead, he highlighted that the current environment is more favourable for traders, particularly those active in derivatives.
According to him, options traders are benefiting from heightened volatility, with strategies focused on volatility trades, such as those based on time decay and implied volatility, proving lucrative. However, he warned that such strategies require deep expertise and a strong understanding of pricing models and risk management.
On the investment side, Azeez sees value emerging in small-cap stocks, noting that valuations across market segments are now more balanced. He also pointed out that India's macroeconomic position, including relatively lower oil dependency as a share of GDP and strong foreign exchange reserves, provides a cushion against external shocks.
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