Should You Invest More During a War? History Says Yes

The Uncomfortable Truth About Wars and Markets

The Iran-Israel-US conflict has sent Indian markets tumbling. The Nifty 50 is down about 11.5% from its January high. FPIs have pulled out over ₹52,000 crore in just two weeks. Crude oil is near $120 a barrel. Your portfolio is bleeding red.

Every instinct is screaming at you to sell everything and wait it out. (For the full breakdown of the FPI sell-off, read: FPIs Pull Out ₹52,700 Crore — Should SIP Investors Worry?) But here is the uncomfortable truth that every experienced investor knows: wars and crises are historically the best times to invest.

Not because war is good. But because markets overreact to fear — and then recover spectacularly.

What History Teaches Us: 5 Crises, 5 Recoveries

Let us look at how Indian and global markets performed during and after major crises. The pattern is remarkably consistent.

1. Kargil War (1999)

When Pakistani forces infiltrated Kargil in early 1999, the Sensex dropped sharply as fear gripped investors. But by the time the conflict ended in July 1999, the Sensex had rallied over 37% from its lows. The Nifty 50 delivered 16.5% returns within just one month of the war ending.

Investors who sold in panic locked in their losses. Those who stayed — or bought more — rode one of the sharpest rallies of the decade.

2. The 2008 Global Financial Crisis

This was not a war, but it was the closest thing to financial Armageddon. The Nifty 50 crashed 65% in just 10 months — from 6,357 in January 2008 to 2,253 in October 2008. Banks collapsed globally. It felt like the end of capitalism.

What happened next? The Nifty rebounded 76% in 2009 alone. By 2014, it had reclaimed its previous highs. By 2024, it was trading at 6x its 2008 bottom.

3. COVID-19 Crash (March 2020)

The fastest crash in Indian stock market history. The Nifty fell 40% in just 46 trading days — from 12,431 to 7,511. The entire world locked down. GDP forecasts were slashed. Nobody knew when normalcy would return.

The recovery? The Nifty reclaimed its pre-COVID peak within 10 months. One year after the bottom, it had nearly doubled. If you had invested ₹1 lakh in the Nifty at the COVID bottom, it would be worth over ₹3 lakh today.

4. Russia-Ukraine War (2022)

When Russia invaded Ukraine in February 2022, FPIs sold ₹1.4 lakh crore worth of Indian stocks that year — a record at the time. Oil prices spiked. Inflation soared. The Nifty corrected about 15% from its highs.

Within 12 months, the market had fully recovered and went on to hit new all-time highs.

5. The Current Iran Conflict (2026)

We are in the middle of this one. The Nifty is down about 11.5% from its January peak of 26,373. FPIs have sold ₹66,051 crore since January 2026. Crude oil has surged to near $120 per barrel.

If history is any guide, this too shall pass. The question is not if markets will recover, but when.

The Data Is Overwhelming

Here is what the numbers say about investing during crises:

• Since World War II, the S&P 500 has been higher one year after major geopolitical shocks 73% of the time.

• The average geopolitical shock causes about a 5% drawdown that recovers in roughly 40 trading days.

• The average equity market correction due to past 23 global conflicts was just 7%, with a median of only 3%.

• After the Kargil War, Mumbai attacks (26/11), and Pulwama strikes, the Nifty delivered positive returns within 1-3 months every single time.

The message is clear: wars create temporary panic, not permanent damage — at least for diversified equity portfolios.

Why India Is More Vulnerable This Time (And Why It Does Not Matter Long-Term)

Let us be honest — the Iran conflict hits India harder than most countries. According to Subho Moulik, CEO of Appreciate:

• India imports 87% of its crude oil, and about 50% of those imports pass through the Strait of Hormuz.

• Every $10 rise in Brent crude widens India's current account deficit by approximately $15 billion.

• A sustained 10% oil price increase reduces GDP growth by about 0.5 percentage points.

• India has zero strategic LPG reserves, making household cooking gas especially vulnerable to supply disruptions.

These are real economic headwinds. Higher oil prices mean higher inflation, weaker corporate earnings, and pressure on the rupee. But here is what matters: India has survived every single oil shock in its history — and the economy and markets have always come back stronger.

The SIP Investor Has a Superpower

If you are investing through SIPs (Systematic Investment Plans), you actually have a built-in advantage during market crashes. It is called rupee cost averaging.

Here is how it works:

• When markets fall, your fixed monthly SIP amount buys more mutual fund units at lower prices.

• When markets recover, all those extra units appreciate in value.

• The result: your average cost per unit is lower than if you had invested everything at the top.

Think of it this way: if your favourite brand of atta (wheat flour) went on a 20% discount, would you stop buying it? No — you would buy more. SIPs work the same way with stocks. A market crash is a sale on future returns.

Use our SIP Calculator to see how rupee cost averaging grows your wealth over time.

What Smart Investors Are Doing Right Now

Based on expert recommendations and historical patterns, here is what smart investors are doing during the current crisis:

1. Continuing Their SIPs Without Interruption

SIP inflows in India remain above ₹30,000 crore per month even during this crisis. Smart money knows that stopping SIPs during a crash is the worst thing you can do.

2. Adding Lumpsum Money on Dips

If you have idle cash and a 5+ year horizon, experienced investors are selectively adding lumpsum investments in large-cap and flexi-cap funds. Large-cap funds tend to hold up better during crises because bigger companies have stronger balance sheets. Use our Lumpsum Calculator to estimate your returns.

3. Increasing Gold Allocation

Gold has surged to ₹1.71 lakh per 10 grams — a record high. While chasing gold after a rally is risky, maintaining a 10-15% allocation to gold (through Gold ETFs or Sovereign Gold Bonds) provides a portfolio hedge during geopolitical uncertainty.

4. Reviewing Their Emergency Fund

Before investing more, smart investors ensure they have 6-12 months of expenses in liquid funds or savings accounts. With LPG prices up ₹60 per cylinder and potential petrol hikes ahead, your monthly expenses might increase. Use our FD Calculator to see how your emergency fund grows in a fixed deposit.

5. Not Panic-Selling

This sounds obvious, but it is the hardest thing to do when your portfolio is down 10-15%. Selling during a crash converts paper losses into real losses. Every major crash in history has eventually recovered. Selling guarantees you miss the recovery.

Who Should NOT Invest More Right Now

Crisis investing is not for everyone. You should NOT invest more if:

• You need the money within 1-2 years (for a wedding, home down payment, etc.)

• You do not have an emergency fund of at least 6 months' expenses

• You are already fully invested with no idle cash

• You cannot emotionally handle seeing your portfolio fall another 10-20%

If any of these apply, it is perfectly fine to just continue your existing SIPs and do nothing else. Doing nothing during a crisis is itself a form of smart investing.

The Bottom Line

Every war, every crisis, every market crash in history has been followed by a recovery. Not some of them — all of them. The Kargil War, the 2008 crisis, COVID-19, the Russia-Ukraine war — every single time, patient investors were rewarded.

The Iran conflict is real and its economic impact on India is significant. But unless you believe India's economy is permanently broken (it is not), this is a temporary setback in a long-term growth story.

Warren Buffett's famous advice has never been more relevant: "Be fearful when others are greedy, and greedy when others are fearful."

Your SIPs are doing exactly what they are supposed to do. Keep them running. And if you have the financial cushion to invest a little more, history suggests you will not regret it.

Related Reading

For a detailed breakdown of the latest FPI sell-off and what it means for your SIP portfolio, read: FPIs Pull Out ₹52,700 Crore — Should SIP Investors Worry?

Planning for long-term retirement savings? Try our NPS Calculator or PPF Calculator to see how disciplined investing builds your corpus over decades.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Markets can remain volatile for extended periods, and past performance does not guarantee future results. Please consult a qualified financial advisor before making investment decisions.