How Does US Iran War Affect Your SIP Portfolio?

Summary

Quick Summary The US–Iran war caused market volatility, leading to short-term losses in SIP portfolios due to falling stock prices and rising oil costs. — Sensex fell ~1,690 points, Nifty dropped ~2%, oil crossed $107, and INR weakened beyond ₹94/USD. SIPs may look negative in the short term, but they benefit from buying more units at lower prices during market dips. Over the long term, markets have historically recovered, making SIP a strong strategy even during crises. Stopping SIP during a crash can lead to missed opportunities and lower future returns. For most investors, continuing SIP with a long-term mindset is the smarter approach during market uncertainty.

Are you concerned about the US-Iran war SIP's impact, or should I continue SIP in a market crash? After observing the conflict, many new investors in India witnessed a decline in their SIPs in mutual funds. There was a rapid decline in stock exchanges and a swift increase in oil prices. 

This explanation uses simple and easy-to-understand sentences with examples instead of finance jargon. Without difficulty, you will gain insights into the SIP portfolio during war, whether you should continue investing, and while also outlining actionable steps. Let's get right into it.

 

What is SIP and Why Beginners Love It

SIP is a systematic investment plan and it involves investing a specific sum of money, e.g., 5000 Rs., into a mutual fund every month, irrespective of whether the market has a high or a low price.

Excitement of new investors is SIP's greatest asset; it eliminates the anxiety associated with investing at the right time. During a market dip, the fixed sum you deposit will result in the purchase of a higher number of units. 

Similarly, during a market boom, the number of units purchased will be lower. As the investment matures, the number of units purchased is averaged and your wealth is increased. It can be used to finance your retirement, purchase a house, or educate your children.

During major geopolitical events, public interest in topics such as SIP in a falling market, mutual fund SIP during war, and how war affects mutual funds spikes significantly.

 

What Happened in the US-Iran War and How War Affects Mutual Funds

Conflict began in March 2026 when the US, Israel, and Iran began hostilities. Oil prices increased, with Brent crude oil being sold at over 107 dollars per barrel. Since India is dependent on oil imports, the prices of petrol and diesel, as well as the costs of transport and the prices of everyday commodities, have increased. Moreover, the Indian rupee depreciated further, crossing the 94 rupee mark against the dollar.

The Indian stock market fell when the overseas markets opened. On March 27, 2026, the BSE Sensex fell 1,690 points (approx. 2.25%) and the Nifty 50 fell 487 points (2.09%). According to some reports, the stock market fell between 4.6% and 14-15% year to date. A lot of equity mutual funds showed negative returns. 

This situation is how war affects mutual funds – the market loses the investors’ confidence, people start selling their stocks, and the share prices fall. Because of the war, the SIP short-term returns fell significantly.

Many investors who held SIPs during the COVID pandemic and experienced positive returns from SIP for a long time witnessed negative short-term SIP returns for the first time. Now, they are starting to panic. Some even go on the internet to search, should I pause SIP and during a geopolitical crisis, equity mutual fund losses.

To understand this impact more clearly, especially which industries are directly hit during such conflicts, you can also read our detailed analysis on Iran-Israel War: Which Sectors Will Likely Suffer The Biggest Losses? where we break down sector-wise risks for investors.

 

 

US-Iran War SIP Impact: Short-Term Pain but Long-Term Opportunity

The US-Iran war SIP effect can be seen only in the short term. Your SIP portfolio during war is currently most likely smaller, especially if your SIP is new or less than 2-3 years old.

The table below shows the different types of equity funds and their performance in the equity fund market during the period of increased tension in March 2026 (data approximated to returns of the period of 1 year, 2 years, and 3 years):

Fund Type	1-Year Return (%)	2-Year Return (%)	3-Year Return (%)
Large Cap	-13.5	-5.2	+2.9
Mid Cap	-10.4	-3.3	+7.3
Small Cap	-15.4	-7.8	+2.3
Flexi Cap	-13.5	-5.2	+3.9
Large & Mid Cap	-12.3	-4.1	+5.2

 

Explanation of data: These numbers were obtained from an analysis by Bajaj Finserv and MSN/Moneycontrol around March 2026. The 1-year column shows the short-term impact of war, high oil prices, and selling pressure. 

However, 3-year returns are mostly positive. This is an indication of war-induced short-term drops, but it can be seen in most cases that the market can recover over time. Your ongoing SIP is buying more units at lower prices, which can result in more profits in the future.

 

Real Example: How SIP Buys More Units in a Falling Market (Hypothetical Recovery Scenario Model)

Let’s make this clear with a hypothetical example. Imagine you are investing in a large-cap fund, and your monthly investment is Rs 5,000.

• - Pre-war drop: (NAV = Rs 100): You receive 50 units (5,000 ÷ 100).

• - War period: (NAV drops to Rs 80): You receive 62.5 units (5,000 ÷ 80).

You get an additional 12.5 units free of charge each month. If you keep your SIP going for several months, and the market recovers (NAV hitting Rs 110 isn’t unreasonable based on previous trends), those free units become valuable.

 

Pause vs Continue Comparison (Hypothetical, for illustration only):

If you stepped back from your SIP for 6 months, you’d be stepping back from the opportunity to purchase hundreds of additional units. When the market rebounds, your investment will be worth significantly less than those investments. This kind of difference can be a reality, ranging from tens of thousands over the length of the investments, depending on how high the investment rebounds.

Note: This is a simplified example for you to understand the opportunity lost without rupee cost averaging. This will be the case depending on the market and the NAV. History has proven that those who invested in SIP during the market dips constructed the greatest wealth.

 

Which Funds Are Hit the Most: Large Cap vs Mid Cap vs Small Cap vs Sectoral 

Equity mutual fund losses due to geopolitical crises do not impact all the funds equally.

- Large-cap funds (big, steady companies): These lost the least. For example, Nippon India Large Cap Fund, HDFC Large Cap Fund, and ICICI Prudential Large Cap Fund. These funds invest in companies like Reliance and HDFC Bank, and so, tend to be steadier during wars.

- Mid-cap funds (medium companies): These have lost more. Examples include Axis Large & Mid Cap Fund, Mirae Asset Large & Midcap Fund, and Kotak Large & Midcap Fund.

- Small-cap funds (smaller companies): Investments in small-cap funds usually see some of the most considerable declines in value. By mid-2022, as noted in the most recent data, small-cap funds had declines of over 15% in value, with 87% of the sector, small caps, suffering double-digit losses. Losses and rapid declines of working capital value quickly lead to the liquidation of small-cap funds in an attempt to reduce losses. 

Examples of small-cap funds include Nippon India Small Cap Fund, Quant Small Cap Fund, and Bandhan Small Cap Fund.

- Sectoral funds (one specific area): Sectoral funds, or funds that invest in some sectors of the market and exclude others, also suffered losses. These include oil, auto, and transport, which include high fuel costs in their breakdown and deficits.

 

Should I Stop SIP in a Market Crash?

Right now, the main question is whether I should delay SIP or stop it during a market downturn. Experts say, "No, keep investing" for the majority of people with long-term objectives.

Why? Your SIP purchases more units at lower prices when the market is down. You lose this benefit if you quit now. History demonstrates that investors who maintain SIPs during difficult times eventually accumulate far more wealth.

For long-term investors, SIP in a declining market is actually one of the ideal times. In a market correction, this is referred to as a long-term SIP strategy. Markets have always recovered from corrections and these should not be stopped in a hurry, according to experts from platforms like Bajaj Finserv and NDTV.

In fact, many experts believe that stopping your SIP during such phases can be a costly mistake. If you want a deeper expert-backed explanation, check out our guide on Stopping Your SIP During a Market Crash? Experts Say This Is a Costly Mistake to understand the long-term impact.

 

Lump Sum vs SIP During War: Which Is Better?

SIP is better suited for beginners rather than investing via a lump sum. It manages your investments in a safer manner while also using Rupee Cost Averaging. Investing via a lump sum may be a greater risk if your investment is at the peak prior to a dip. In general, SIP is the smarter option for the majority of investors, especially during a mutual fund SIP during war.

 

Short-Term vs Long-Term Asset Allocation (with Model Examples)

Asset allocation refers to investing your money into equity (stocks/mutual funds) vs. debt (safer investment options, e.g. bonds or fixed deposits).

Model Examples by Age/Risk Profile:

- Young investor (25-35 years, high risk tolerance, 10+ year goal): 70-80% in equity SIPs (mix of large and mid cap), 20-30% in debt.

- Mid-age investor (35-50 years, moderate risk): 60% equity, 40% debt.

- Near retirement or conservative (50+ years): 30-40% equity, 60-70% debt.

If your goal is many years away, the US-Iran war SIP impact is only a temporary bump.

 

 

SIP Strategy During Volatility: What Experts Suggest

Here's a straightforward SIP strategy during volatility and a stock market crash. SIP investment method:

• - Keep your monthly SIP as is.

• - If your income is consistent, a small step (10-20%) up is recommended to purchase more at the lower costs.

• - Having a balanced, diversified portfolio is key. For safety, you could include large caps, mid caps, and a portion in debt funds.

• - Check your portfolio every 3-6 months and not daily.

• - Stay focused on your long-term objective and disregard daily updates.

This is a disciplined and recommended approach that financial experts endorse. It will turn a long-term investor’s insecurities into a benefit.

 

What Type of Investor Should Do What Now (Summary Table)

Investor Type	Continue SIP?	Increase SIP?	Recommended Action
Salaried (5+ year goal)	Yes	Yes (10-20%)	Step up if comfortable, stay diversified
Retiree or near retirement	Review	No	Shift more to debt funds
No emergency fund	Pause/Review	No	Build 6-12 months expenses first
High EMI / heavy debt	Review	No	Reduce equity risk, consult an advisor
Near-term goal (1-3 years)	No (for equity)	No	Move SIPs to debt or savings

 

This table provides a basic framework for decision-making for beginners.

 

Common Mistakes Investors Make During Crashes

During the SIP impact of the US-Iran war, a common mistake made by many:

1. Stop or pause SIPs due to fear.

2. Liquidate all equity funds to gold or fixed deposits.

3. Continuous fund switching due to news.

4. Invest a big lump sum without considering personal risk.

5. Daily checking their investment app for stress.

Save your time and avoid these mistakes.

 

Past Crises: What History Teaches SIP Investors

History helps us remember what we can be confident in. Here are some of the Nifty performances across different wars/crises:

 

Crisis	Initial Fall	Recovery Time	1-Year Return (approx.)	Lesson for SIP Investors
Kargil War (1999)	~6-8%	3-6 months	+29% to +36%	Stay invested; quick rebound
Iraq War (2003)	~2-5%	Few months	+68%	Buy on dips through SIP
Russia-Ukraine War (2022)	~4-11%	1 month	Positive (recouped)	Fear is short; long-term growth returns

 (Data explanation: Compiled from Economic Times, Hindu BusinessLine, and ICICI Direct historical analysis. On average, Nifty delivered around 24% returns in the year following such events. The initial fear gave way to a strong recovery. So, in answer to the question, should you stop SIP in a market crash? No, history proves continuing SIP wins).

 

Do This Now / Avoid This Now – Actionable Checklist

Do this now:

• - Gain confidence at least in the savings for the emergency (6-12 months' expenses).

• - Continue all your existing SIPs.

• - Increase your SIP only if income allows and the goal is a long-term, 10% (small) SIP increase.

• - Evaluate your portfolio once.

• - Confide in a trusted advisor if confused.

 

Avoid this now:

- Stopping or pausing your SIP.

- Selling funds in panic.

- Investing a big lump sum all at once.

- Changing funds just because of war news.

If you are looking to actually benefit from market crashes instead of fearing them, you can also explore our strategy guide on Market Crash Opportunity. This Simple Index Fund Strategy Could Win! where we explain a simple approach to turn volatility into opportunity.

 

 

 

Conclusion

Today, the impact of the US-Iran war SIP is certainly worrying, but it is only transitory. Despite numerous wars and crises, markets have always bounced back stronger. Even while your SIP portfolio may currently indicate losses due to the war, the additional units you are accumulating will be useful once things return to normal.

For new investors, timing is not the key to success; patience and consistency are. Take advantage of the market impact of the Iran War on SIP to develop healthier habits. Let time and compounding work for you, adhere to the checklist, and steer clear of typical blunders.

See a qualified financial counselor if your circumstances are particular. If you're new, start small, but don't let fear stop you.

 

DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.