WAR & INVESTING

What to do and what not to

- Sneha Suri

The Russian invasion of Ukraine, which has been termed as the most destructive war since the Second World War, has rocked the markets worldwide.

Obviously, the Indian markets are not untouched. Initially, the markets reacted sharply to the Russia-Ukraine war. On February 24, the Sensex fell 4.7 per cent. It recovered the next day by 2.4 per cent. Over two weeks till March 8, 2022, the Sensex has fallen by 8 per cent. If we look at the fall since its peak in October 2021, the Sensex is down by about 13 per cent.

While Russia and Ukraine are engaging in dialogue, the situation is still not resolved. As of this writing, the Russian forces have surrounded the Ukrainian capital, Kiev. The West is worried about the Russian advance into the NATO territory, at which point NATO would stop being a spectator. The Russian sabre-rattling about using nuclear bombs has already had world leaders sweating in anxiety. Some media outlets are even extrapolating the current crisis to another world war.

Only time will tell if this situation improves or worsens. As investors, our job is to hope for the best but to be prepared for the worst. It's not the first time that a war has happened, so we do have experience of previous similar crises. It's time to use that knowledge and combine it with some foundational investing wisdom to prepare a battle plan. So, here you go.

Putting things in perspective

The markets have not fallen for the first time. While the situation is still unfolding, from the current standpoint, markets have seen much worse falls. Further, the current fall is not really as scary as it is being depicted.