Volatile markets are testing investors. Here's where smart money is moving

A combination of geopolitical conflicts, sticky inflation, elevated interest rates, supply-chain disruptions and trade wars has created fresh uncertainty across global equity markets, leaving investors struggling to navigate one of the most complex macroeconomic environments in recent years. From tensions in the Middle East to growing fragmentation in global trade and continued pressure on commodity prices, multiple headwinds have battered investor sentiment worldwide. However, instead of witnessing a sharp market crash, investors are seeing prolonged sideways movement and extended consolidation across global and Indian equities. Read Full Story Raj Dandu, Vice Chairman of the Dandu Group, said that markets are currently undergoing what analysts call a “time correction”. “What we are experiencing is the classic exhaustion of liquidity-driven momentum giving way to macroeconomic reality. A price correction is sudden and violent, but a time correction is a true test of investor patience,” Dandu said in an interaction. “The global economy isn't collapsing, but its engine is being choked by two structural forces: ongoing kinetic conflicts in Europe and the Middle East, and a highly fragmented trade war between major economic blocs. Markets are trapped in a holding pattern—earnings are catching up to historical overvaluations while valuation multiples compress in an orderly, slow-motion manner,” he added. WHY GEOPOLITICS IS HURTING MARKETS FOR LONGER Dandu said modern geopolitical conflicts are no longer isolated events that markets can quickly absorb. “The nature of these conflicts has changed from isolated events to systemic disruptors. Earlier localized shocks briefly affected sentiment; today’s trade and physical wars directly impact supply chains, commodity flows, and currency stability,” he said. “When you weaponise supply chains, impose sweeping chip export controls, or restrict shipping through vital maritime straits, you introduce structural friction and costs into every layer of global trade,” he added. According to him, corporations globally are now shifting from “Just-in-Time” efficiency models to “Just-in-Case” logistics focused on resilience and redundancy. “Corporations cannot optimise for absolute efficiency anymore; they must optimise for redundancy and resilience. This transition from ‘Just-in-Time’ to ‘Just-in-Case’ logistics is inherently inflationary,” Dandu said. He added that because central banks cannot aggressively cut rates without reigniting inflation, markets are likely to remain in a prolonged consolidation phase. “Because central banks cannot easily cut rates to rescue markets without risking a resurgence in inflation, equity indices are forced into an extended consolidation phase as they adjust to lower structural profit margins,” he said. INDIA MAY BE RESILIENT, BUT NOT IMMUNE Despite India’s relative strength compared to many emerging markets, Dandu cautioned against assuming that Indian equities can completely decouple from global weakness. “India is decoupling conceptually, but it cannot decouple mathematically. Global gravity eventually catches up with every market,” he said. “Our high valuations require sustained earnings growth of 15% to 20% to be justified. When global growth slows down due to trade frictions, our export-driven sectors—like IT services, chemicals, and pharmaceuticals—naturally feel the pinch,” Dandu added. At the same time, he believes India’s internal macroeconomic foundations remain significantly stronger than in previous cycles. “Our macro foundations are vastly superior to previous economic cycles. Corporate leverage is at multi-decade lows, the banking system's balance sheet is incredibly clean, and the domestic investment equity flows via mutual funds have become an unyielding wall of support,” he said. “The Indian market is going through an essential, healthy time correction where price levels flatline while corporate earnings expand underneath to match those valuations,” he added. WHERE IS SMART MONEY MOVING In this volatile environment, Dandu said investors should focus on sectors backed by long-term structural tailwinds instead of chasing short-term momentum. “We are prioritising sectors that are backed by unstoppable structural tailwinds and are relatively insulated from short-term global macro noise,” he said. According to him, the Dandu Group is currently concentrating on five key sectors: defence, healthcare, renewable energy, Battery Energy Storage Systems (BESS), and data centres. On defence, Dandu said, “With geopolitical friction escalating and India aggressively pushing for defence indigenisation (Atmanirbhar Bharat), defence localisation is a massive, multi-decade secular growth driver.” Discussing healthcare, he said, “Rapidly evolving domestic healthcare demands, combined with India's emergence as a highly competitive global hub for clinical manufacturing and medical services, makes healthcare an exceptionally resilient sector.” On ren