Global and Indian equity markets are shifting their focus away from geopolitical risks to prioritize growth [1].

This transition is significant because it suggests that investors are no longer pricing in extreme volatility from international conflicts, which can unlock capital for large-cap assets and emerging markets.

Rohit Tandon, a fund manager at Kotak Mahindra Asset Management Company, said that markets are looking past geopolitical tensions and are expected to move forward [1]. According to Tandon, this shift is occurring across both the broader global markets and the Indian equity market, specifically the Nifty [1].

The movement is driven by a combination of easing geopolitical tensions and stable commodity prices [2]. These factors are reducing risk premiums, which in turn supports higher valuations for equities [2].

Market participants are reacting to a rewiring of global risks [3]. As the immediate threat of commodity price shocks diminishes, the pressure on corporate margins eases, allowing investors to focus on fundamental earnings rather than external shocks [2].

Tandon said that the current environment is fostering a more positive risk sentiment [1]. This sentiment is particularly relevant for the Nifty and other Indian indices as they navigate a complex global economic landscape [1].

“Markets are looking past geopolitical tensions and are expected to move forward”

The shift away from geopolitical risk premiums indicates a transition from a defensive market posture to a growth-oriented one. When commodity prices stabilize, the unpredictability of input costs for manufacturers and energy providers drops, leading to more predictable corporate earnings. For the Indian market, this suggests that domestic growth drivers may now outweigh global instability in determining the Nifty's trajectory.