MUMBAI: Urging investors to remain patient and not to panic, Sebi chief Tuhin Kanta Pandey has said episodes of extreme volatility are not new and the markets have historically recovered after major global disruptions.
It can be noted that since the war on Iran began on February 27, the markets have lost more than 8 percent, the second worst after the Japanese Nikkei which lost 8.5 percent in the past 13 days.
While the Sensex lost 8.3 percent, the broader Nifty is down 8.1 percent, ripping off as much as Rs 34 trillion of investor wealth in the past two weeks of which as much as Rs 19.9 trillion in the week ending March 13 alone, yanking down the BSE market capitalisation to Rs 429.4 trillion.
On the day the war began, the Sensex was at 81,287 (down 1.2 percent) and Friday on the 13th day of the war, the index was at 74,564 down 1.98 percent on the day, the lowest level since April 2025.
Since the war began, foreign investors have dumped shares worth Rs 64,500 crore, this is on the back of another Rs 40,000 crore between January and February and $18.9 billion in the previous calendar year, making it their worst market rip-off.
Of the 8.3 percent loss, as much as 5.5 percent loss was booked in the week to March 13, making it the worst bleeding since the pandemic-hit March 2020 when the indices were down by a fifth of the value.
“One lesson becomes clear: periods of extreme volatility don’t last forever and investors must remain patient. In the past, we’ve witnessed disruptions caused by the Covid-19 pandemic and the Russia-Ukraine war. Markets witness turbulence but they eventually stabilise. Volatility is the real test of market systems today,” Pandey said at an event organized by Moneycontrol.com, the online news service of CNBCTV18, Saturday.
According to the regulator, the resilience of markets is tested during periods of extreme uncertainty, but efficiency and transparency allow them to recover and market volatility from geopolitical tensions eventually stabilizes even as he admitted that markets face turbulence from geopolitics, energy shocks and AI disruption.
“But volatility does not last forever.”Pandey said the current global economic environment is defined by uncertainty, but stressed that markets have historically stabilised after periods of disruption.
“If there is one word to describe markets today, it is uncertainty,” as geopolitical tension and conflicts are reshaping economic relationships and influencing capital flows and energy supplies worldwide.
“Geopolitical tensions are shaping economic relationships. Conflict in the Middle East has massively disrupted energy supplies. Inevitably, capital markets have been severely impacted,” Pandey said.
Stating that volatility has become the defining feature of modern financial markets, particularly as the information environment has evolved and shocks spread quickly across economies, he however, urged retail investors not to react impulsively to short-term fluctuations.
“For retail investors, the best strategy would be to remain patient.” Further Pandey said volatility itself should not be viewed as a sign of market weakness. Instead, he said the true test of a market lies in how efficiently it functions during periods of stress.
“Can markets remain efficient when uncertainty itself becomes the norm?” he asked and argued that “the real test of a market is not whether volatility appears, but whether the system runs smoothly and efficiently when it appears.”
Noting that technological disruptions especially artificial intelligence and geopolitics are reshaping the global economy, Pandey highlighted how structural shifts in the global economy are influencing markets while rapid technological change, particularly the rise of artificial intelligence, is reshaping industries and business models across sectors.
But amidst all these disruptions, he said our capital markets have deepened and strengthened significantly over the past decade.
“Despite global uncertainty, our capital markets have strengthened significantly over the past decade. Our market ecosystem has expanded and become more resilient. Since FY15, our markets have grown at a compound annual growth rate of about 15%, while the corporate bond market has grown at a Cagr of around 12%, while mutual fund industry’s assets under management have expanded at over 20% Cagr, reflecting growing investor participation.”
Pandey said these trends indicate that our capital markets are deepening and becoming increasingly resilient even amid global volatility, he said.
Noting that modern markets operate in a much more complex information environment, he said rapid news cycles, algorithm-driven trading, and energy price swings have amplified short-term volatility, but robust systems and regulatory oversight help contain shocks.
"The best strategy is to remain patient. Global efforts are underway to restore stability," he concluded.