'Markets have over-reacted', says Ramesh Damani as Sensex crashes 2500 points amid panic selling - What should investors do?

Even as the Sensex plunged 2,500 points in a dramatic intraday collapse post Israel-US-Iran conflict, veteran investor Ramesh Damanisaid the markets are “probably overreacting to this particular day."

Damani said he was “extremely shocked” at how the indices opened, noting that the sudden 2,500‑point slide on the Sensex was unlike a typical correction. “It opened 2,500 points down, then it recovered — which makes me breathe easier,” he said, emphasising that fear, not fundamentals, drove the first-hour volatility. He added, “Over the last 10–20 years, we’ve always seen a great significant dip as a buying opportunity and I continue to hold that view.” According to him, despite the geopolitical churn and global uncertainty, the long‑term India story remains intact.

The market, he argued, often reacts emotionally to big geopolitical events. “The world has changed thanks to Trump. The world is changing on its axis,” he said, pointing out that investors must learn to navigate “pockets of profit and pockets of loss” rather than react to every shock. He believes the fear-driven sell‑off has overshadowed deeper structural shifts taking shape across defense, commodities, supply chains, and pharmaceuticals.

On sectoral trends, Damani pushed back against the consensus rush into crude‑linked trades. “I’m not very bullish on the prospects of oil,” he said. In his view, the geopolitical map could shift rapidly: “After this war gets over in the next few days, you can look forward to a period of unparalleled peace and prosperity in the Middle East, which means energy prices will be good.”

Defense, however, remains a structural theme for him. “A lot of countries are now going for economic nationalism. So defense will be a high priority area,” he said. He added that commodities and supply‑chain‑linked businesses stand to benefit as global companies push for localization. “The anti‑AI plays will do well, the commodity plays, infrastructure plays, pharmaceutical plays,” Damani explained, noting that investors are ignoring second‑order themes amid today’s chaos.

Damani warned that while the Middle East conflict dominates headlines, the more transformative force, artificial intelligence, is still approaching “like a freight train coming down to us.” He called for caution, not pessimism: “Not necessarily bearish on it, but careful because there will be winners and losers.” Drawing on Darwin, he argued the leaders of tomorrow will be “the most adaptable to change, not the strongest.”

To illustrate how industries evolve, he recalled the Bombay Stock Exchange’s early computerisation push. “Contrary to popular opinion, the BSE was not against computerisation… but the people sponsoring it were voted out,” he said, pointing out how legacy attitudes delayed progress. From 300–400 crore turnover in the 1980s, he noted, markets today clock USD 14 billion in daily cash volumes, a testament to how quickly systems transform when adaptation kicks in.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)