Where should investors put money in the current market? Experts answer

Benchmark indices are showing resilience despite persistent global uncertainties, with experts noting that markets are increasingly ignoring negative news flow and focusing on recovery prospects and earnings visibility.

Market participants said the recent trend suggests that the impact of adverse developments is fading faster, even as geopolitical tensions and global cues remain mixed.

Markets ignoring negative news, say experts

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Feroze Azeez, Joint CEO at Anand Rathi Wealth, said investor behaviour plays a key role in this pattern.

“Negative news tends to have a diminishing impact over time. Weak hands exit early during sharp falls, usually within the first few days. As selling pressure reduces, continued buying leads to market recovery,” he said.

Focus shifting from fear to downside risk assessment

He added that investors often ask the wrong question about market direction, instead of assessing downside risk.

“Investors should evaluate how much the market can fall. If the downside is limited, gradual allocation makes sense. Historically, markets have recovered in most cases after geopolitical disruptions,” he said.

Historical data shows recovery after shocks

Azeez pointed out that past data shows markets have rebounded in 11 out of 12 major global conflict situations once uncertainty eased.

On strategy, he advised investors not to wait indefinitely after missing the recent rally. “Waiting for perfect clarity often leads to missed opportunities. Even at current levels, investors with a two to three-year horizon can aim to beat fixed deposit returns,” he said.

Broad-based buying suggested at current levels

He recommended a broad-based approach at current levels. “When markets are relatively lower, it is better to buy the broader market rather than being too selective. This includes large-cap, mid-cap and small-cap segments,” he said.

Azeez also highlighted strong liquidity support from domestic institutional investors. “Mutual funds are holding significant cash, and that provides a cushion to the market. Rising cash levels indicate there is still buying power available,” he said.

Markets are turning stock-specific and theme-driven

Meanwhile, Gurmeet Chadha, CIO at Complete Circle Wealth, said markets are gradually discounting the possibility of de-escalation in global tensions.

“Incremental reaction to geopolitical statements is reducing. Markets are factoring in probabilities of resolution and de-escalation,” he said.

He cautioned, however, that prolonged disruption could shift risks from supply shock to demand slowdown.

“If the situation continues for long, supply disruptions can translate into demand destruction. That may lead to downward revisions in growth and earnings estimates, capping market upside,” he said.

Energy, defence, banking and selective IT in focus

On market outlook, Chadha said the trend is turning more stock-specific and theme-driven. “It is becoming a stock pickers’ market. A few key days in a year contribute significantly to returns, so staying invested is important,” he said.

Among sectors, Chadha highlighted energy, defence and banking as key themes. “The energy space looks attractive, especially transmission, equipment and grid-related segments. Large investments are expected in power infrastructure and renewable integration,” he said.

He noted a strong opportunity in defence due to policy support and localisation trends. On banking, he said fundamentals remain strong with healthy loan growth and stable asset quality.

On IT, he said valuations have corrected, and selective opportunities may emerge, though the broader outlook remains cautious.

Market experts said investors should focus on disciplined allocation rather than trying to time the market. They advised staggered investments, diversification across sectors and maintaining a medium-term horizon to navigate volatility.

With domestic liquidity remaining strong and earnings growth continuing, analysts believe the broader trend remains constructive, even as global risks persist.