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New Year 2026: Fuelled by Hope, Guided by Caution

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It was pleasant surprise to see a clearer morning than expected on the very first day of 2026. And we are very hopeful that the Indian economy and our investments will also follow suit and do much better than expected this year. Wishing you a very Happy New Year 2026.

Government has taken many steps to boost the economy and the same has started reflecting in its performance. India's economy has been the fastest growing economy for over 4 years now among all major economies of the world and is likely to continue treading the path over the next decade.

The growth in economy did not replicate in stock markets. Major reason for this was policy uncertainties from USA, continued global conflicts and subdued performance of developed countries, forcing FIIs to withdraw large funds from Indian stock markets. Since October 2024 FIIs have withdrawn over 2.6 lakhs crores from equity markets. Compared to this MF alone pumped in over 4.8 lakh crore which has kept markets steady and indices trading within a range.

This helped large cap & midcap indices to generate returns over 10% & 8% returns respectively for 2025. Though small cap indices lost around 5% during the same period. Buoyancy in consumption post GST reforms and increased tax-exempt income in the hands of tax payers, is likely to translate into good top line (Sales revenue) of companies that should improve their profitability and improve the earnings of the markets.

While all fundamentals look positive, caution must be exercised till US trade deal see the light of the day and Russia-Ukraine war comes to an end. Political & civil disturbances in neighbourhood also need close attention. These concerns and cautious approach of central banks around the world against US$ hegemony caused stellar run in gold prices. Which traversed through silver as well. Increased industrial usage of silver is also a good reason for risen silver prices. At the current price levels both demand caution for fresh exposure though for over next 2-3 years outlook is neutral with positive bias.

In such scenario long-short funds (AIFs & SIFs), along with multi asset allocation funds (MAAF) & balance advantage funds (BAF) become the choice of the day. While long short funds protect the downside through hedging, MAAF & BAF manages risk through asset allocation. An exposure of 10-25% of your overall portfolio into these funds will be a good option. What exactly your portfolio requires, sit with your InvestmentMitra (advisor/distributor), review your portfolio and take corrective action if needed.

Once again Best Wishes from all of us at InvestmentMitra for your good health, galloping wealth & happiness abound all through your life.

Team InvestmentMitra

**All investments are subject to market or other type of risk. Please read the offer documents carefully. Views expressed here are general in nature and no specific recommendation. Please contact your advisor for specific suggestions / recommendations on your portfolio. 

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