Speaking to ET Now, market expert Ajay Bagga said the current environment requires patience rather than aggressive buying. He noted that the global situation remains fluid and unpredictable. “Yes, very tough to say. Even Trump changes his mind three times a day,” Bagga said, adding that the best approach for investors is to identify fundamentally strong stocks and themes but avoid committing capital immediately. He observed that Indian markets have shown brief afternoon recoveries in recent sessions but the broader trend remains downward.
Bagga believes the ongoing conflict may not last long and could resolve sooner than markets expect. According to him, the key risk lies in how rising oil prices and energy market disruptions transmit into broader financial markets. However, he said India may be relatively insulated given its ability to source crude oil from alternative suppliers. “The big issue is the oil price transmission… but I think that also does not get so bad for India,” he noted, suggesting the situation could ease within a few weeks.
Concerns have also emerged about Indian infrastructure companies with exposure to the Gulf region. When asked about the prospects of Larsen & Toubro amid the conflict, Bagga said such geopolitical disruptions are usually temporary. He pointed out that most international contracts contain force majeure clauses and therefore temporary disruptions do not fundamentally alter the long-term business outlook. “Is the business model going to change dramatically? No,” he said, adding that Gulf economies will eventually resume infrastructure spending once stability returns.
Despite the current volatility, Bagga remains constructive on the broader Indian market, particularly the financial sector. He believes banking and financial stocks will continue to lead the market when stability returns. “Banks and financials will continue to lead and there is no deterioration in the fundamentals for the country,” he said. While elevated oil prices could affect inflation and the current account deficit if sustained, Bagga does not believe this will become a long-term structural issue.
He also explained that part of the market weakness stems from global liquidity dynamics. In risk-off environments, international investors often withdraw funds from liquid markets like India to meet margin calls elsewhere. The unwinding of leveraged trades, particularly those linked to artificial intelligence stocks globally, has added to volatility in multiple markets.
On the technology sector, Bagga believes Indian IT companies will eventually recover but investors should wait for clearer signals before entering. “Yes, they will weather the storm but not a time to buy yet,” he said, pointing out that the sector remains under-owned and sentiment is still weak. He added that investors could get better opportunities in the coming months once companies provide clearer guidance on demand trends and AI-driven services. Consumption remains one of India’s strongest structural growth themes, but Bagga suggested investors should be selective within the sector. He prefers discretionary consumption segments such as automobiles and consumer durables over traditional FMCG companies. “Consumption is a mega trend for India,” he said, though he noted that urban demand has shown some signs of softness while rural trends will become clearer after the current harvest season.
Real estate, according to Bagga, may take longer to regain momentum due to slower job creation in the IT sector, which has traditionally driven housing demand in several urban markets.
Among the sectors he remains most optimistic about is defence. Bagga highlighted the global shift toward higher military spending and rearmament as a long-term opportunity for Indian defence manufacturers. “We are going to do very well… there is a rearmaments mega trend happening around the world,” he said, advising investors to approach the sector with a long-term perspective of three years rather than expecting quick gains.
For now, Bagga’s message to investors is simple: prepare, but do not rush. In a market dominated by geopolitical developments and global liquidity shifts, patience may prove to be the most valuable strategy.