‘After 9/11, markets crashed 43%, but…’: Why current crisis is a long term investment opportunity

The US and Israel’s war against Iran, which has fired up oil prices and led to natural gas shortages, has roiled equity markets over the past few weeks; year-to-date, the BSE Sensex is now down close to 14%, and the broader BSE 500 is also dropping over 12%.

Avinash Satwalekar, President, Franklin Templeton – India, wants investors to think long-term and continue investing, keeping in mind their goals, instead of worrying too much about the current market volatility.

Must Read: Sensex, Nifty crashed, then recovered – What’s behind the bounce back of stock market

He pointed out that past crises showed that markets always recover once they end and therefore feels investors should look at the current volatility as an “opportunity.” Franklin Templeton’s presentation shows that during the global financial crisis in 2008, the Nifty 500 saw a 57% drawdown, but rebounded a year later and managed over 17% compounded returns over the next 3-5 years.

Back in 2001, the attack on the World Trade Centre in New York in 2001, led to the Nifty 500 cracking 43%, but rebounded 22% over the next year and 40 per cent over three years. It was more-or-less a similar observation post to other major local or global crisis.  

“If you are putting in money today in your SIPs and you don’t do what most investors tend to do, which is cancel your SIPs, you are buying that many more units for the same rupee that you put in. Mathematically, you’re averaging down,” explained Satwalekar.

But, he admits, staying the course amid so much volatility is not easy.

“It’s not for people who have a weak stomach. It’s for only those people who are willing to look out 3-5 years. Then you get an opportunity,” said Satwalekar.

He pointed out that post the current market correction, large caps were looking more comfortable, with their valuations at their long-term average, but while midcap and smallcap had also declined, their valuations were still not close to their long-term average.

Foreign institutional investors have been selling heavily in the Indian market. In 2025, weak corporate earnings made valuations unattractive, which, coupled with the US import tariff-related uncertainties, led to massive FII outflows. The conflict in West Asia has only aggravated that. As of April 2, foreign portfolio investors had offloaded Rs 1.50 lakh crore from the Indian equity market in 2026, as per data from NSDL. In 2025, they sold stocks worth over Rs 1.6 lakh crore.

Should the war end, corporate earnings are also expected to recover over the next two years, and as earnings pick up, the valuation concerns will further go away, and that’s when the FIIs will also start coming back, felt Satwalekar.

“If you are going to start seeing India go back to the mid-double-digit (earnings) growth again, and it’s trading at the same valuation it normally trades at, all this money that is going out will come right back,” he noted.

Franklin Templeton is launching its first offering under its specialised investment fund (SIF). Its Sapphire Equity Long-Short SIF aims to seek long-term capital appreciation across market cycles, through a model-driven quantitative strategy. The differentiating factor in SIFs is that they can potentially take advantage of market shifts by taking short positions up to 25% of their net assets, which can help reduce downside risks during market corrections.

“Our proprietary, data-driven quantitative approach evaluates stocks using over 40 factors across quality, value, sentiment and alternative indicators, with a dedicated framework for identifying short opportunities,” said Satwalekar.

 The Sapphire Equity Long-Short SIF will be benchmarked to the Nifty 500 index.