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The Indian stock market is currently booming. But there is also concern about the boom in the Chinese market. Apart from this, uncertainty about the Iran-Israel conflict can affect the boom in the Indian market. Actually, these factors can keep foreign investors away from the Indian stock market. So the question is how can investors deal with the current turmoil in the market?
Will the Israel-Iran conflict have any impact?
Well-known investor Prashant Khema told Moneycontrol that the situation is still quite volatile. Right now, it is difficult to say whether it will escalate further or not. We have seen similar incidents before, like - a few months ago Iran fired more than 200 missiles, which did not have any major impact. Meanwhile, the Russia-Ukraine conflict is also continuing without causing serious damage to other economies or markets. After the Russia-Ukraine conflict started, many investors became very negative towards India. They feared that India could face sanctions from the US due to its inclination towards Russia. But this did not happen and the market continued to rise after that.
Apart from this, it has been almost a year since the Hamas-Israel conflict started. You cannot predict these events with certainty. Forget geo-political or global macroeconomy because it is impossible to predict even India's macroeconomy with certainty. The big issue is that even if you can predict these events, you cannot predict the market's reaction to such outcomes.
Is there a possibility of a correction?
According to the veteran investor, it is difficult to tell. At some point, these things can really pose a serious risk, but it is difficult to predict it. The market is currently going through a difficult phase. The good thing is that these events seem big and devastating at the time they occur, but many of them come and go and the market keeps moving forward.
What precautionary steps should be taken
Prashant said that adopting a defensive stance or exiting the investment by predicting the events is not a right solution. It is risky for both investors and managers.
Will China increase tensions
At present, there is talk of a "Sell India, Buy China" trend. Because a 35% jump has been predicted for the neighboring market. There is talk of shifting from India to China after China's recent stimulus. Some foreign funds have already turned to China and this may continue in the future.
Prashant Khemka said that this is unlikely to cause a major setback to India. Foreign investment is only one part of the equation. India's domestic flow remains strong and long-term problems with China are linked. What are the problems with China? According to experts, the main issue with China is not just the economy, but also the political environment. Earlier, China was moving towards democracy, although its timeline was uncertain. This has hurt business sentiment because now the business is controlled by one person. In China, the listing of a company can be stopped overnight and education companies can be made non-profit overnight. This cannot happen in democratic countries like India or America. What kind of correction should investors be prepared for?
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