Market playbook under strain amid West Asia war; downside seen limited

The median fall across key global events since 2003-including the Lebanon War, the Russia-Ukraine conflict, and the Israel-Hamas war-stands at around 7 per cent

Geopolitical shocks have historically triggered sharp but relatively contained drawdowns in domestic equities. An analysis by Elara Capital shows that across seven major conflicts, the Nifty 50’s decline from the onset of hostilities has remained in single digits.  The median fall across key global events since 2003 — including the Russia-Ukraine conflict, and the Israel-Hamas war — stands at around 7 per cent. Even during more severe episodes such as the Iraq war, the index corrected 10 per cent at its peak, followed by a swift recovery.  However, the US-Israel-Iran conflict appears to be testing this pattern. Nifty has already slipped over 10 per cent. Analysts suggest markets may be pricing in a more prolonged or systemic risk this time, given the conflict's scale. That said, Elara noted that if trends hold, downside from current levels may remain limited. “Once early signs of normalisation emerge, markets tend to recover swiftly,” said strategists Garima Kapoor and Saharsh Kumar.