FPJ News Service mumbai

Despite ongoing geopolitical tensions between Israel and Iran, markets recovered on Monday. Investors maintained their focus on long-term fundamentals in times of volatility. The 30-share BSE Sensex climbed 677.55 points to settle at 81,796.15. The 50-share NSE Nifty rose 227.90 points to 24,946.50.

“Despite ongoing geopolitical tensions between Israel and Iran, the market moved higher, supported by gains in large-cap stocks, as investors maintained their focus on long-term fundamentals in the time of volatile situations.

“Geopolitical developments in the Middle East are likely to influence near-term market sentiment, with any signs of de-escalation being closely monitored. Small-cap stocks are expected to underperform in the short term, given their elevated valuations and absence of short-term triggers. Among sectors, oil and gas recorded strong gains, while the IT sector outperformed in anticipation of the upcoming US Fed policy meeting, which is expected to provide further clarity on the interest rate outlook,” said Vinod Nair, head of research, Geojit Investments.

“Markets will be severely impacted only if Iran closes the Strait of Hormuz triggering a huge spike in crude. The uncertainty stemming from the Israel-Iran conflict has created a risk-off in global markets. The safe haven buying is keeping gold firm but the dollar continues to be weak.

“This appears to be a low probability event now.  Past experience tells us that times of uncertainty and risk-off are buying opportunities for long-term investors. The difference this time is that the risk-off has not triggered big selling in equities making their valuations attractive. The market scenario characterised by sustained retail buying and fund flows into mutual funds will ensure valuations remaining high for an extended period of time. Therefore, long-term investors can use this risk-off scenario to buy relatively attractively valued stocks like financials,” Dr VK Vijayakumar, chief investment strategist at Geojit Investments, said.