Markets face volatile two months as geopolitical fears and liquidity risks rise

Geopolitical tensions linked to Venezuela have emerged as a fresh trigger for market weakness, but concerns were already building beneath the surface, says G Chokkalingam of Equinomics Research.

He expects the next two months to remain highly volatile, with a clear downward bias, driven by rising global uncertainty and domestic liquidity stress.

Chokkalingam points to sustained promoter selling, estimated at nearly Rs 2.5 lakh crore over the past 18 months, which has tightened liquidity and added pressure to markets.

He warns that 60–70% of stocks could correct between 10–40% from recent highs, with small- and mid-cap stocks likely to face the sharpest volatility.

However, he believes benchmark indices such as the Sensex and Nifty may remain relatively stable due to continued support from domestic institutional investors.

On gold, Chokkalingam is cautious. He does not expect another strong rally and warns that gold prices could see a meaningful correction in 2026 as demand slows and some central banks begin selling.