Brace for a cold and windy 2026, follow the dharma of asset allocation: Nilesh Shah

As we bid farewell to CY25, a year that resembled a thrilling T20 match for precious metals like gold and silver-delivering spectacular returns amid global uncertainties-while equities played a resilient Test match innings and fixed income endured a washed-out session with subdued yields and volatility. CY25 was indeed eventful, marked by geopolitical tensions, policy shifts, and a resilient Indian economy navigating global headwinds.

Looking ahead to CY26, expect a year full of ups and downs, much like a gripping Test series with unpredictable swings. The Nifty is poised for its 10th consecutive positive calendar year close-a remarkable streak. Yet, the law of averages often catches up. Instead of the blockbuster returns of the last five years, equities may deliver more moderate gains in CY26. Earnings growth is likely to rebound to double digits, supported by improving consumption, capex revival, and rural recovery. Valuations appear fair relative to historical averages and global peers, providing a solid foundation. Domestic buying remains robust through SIPs and institutional flows, while global selling pressure should ease, potentially turning into net inflows as emerging market attractiveness grows.

Be prepared for elevated volatility, driven by geopolitical factors and policy uncertainties. Stock picking and sector rotation will be key-focus on themes like financials, consumption, healthcare, and infrastructure for alpha generation.


For gold and silver, the positive outlook persists, fuelled by sustained central bank purchases and safe-haven demand. As long as no disruptive technological breakthrough emerges-like lab-grown alternatives flooding the market-their structural appeal should endure, offering portfolio diversification amid currency debasement trends.

In fixed income, agility is essential. Manage duration dynamically: the long end may perform well with central bank support and easing cycles, while carry strategies through selective credit risk can enhance returns in a stable yield environment.

Investors have to follow the dharma of asset allocation. The best way to pursue that will be to look at the asset allocation of two or three multi-asset allocation funds. Our MAAF has now allocated 66% to equity at neutral allocation, 14% in debt in underweight allocation, and 20% in silver and gold at overweight allocation. Obviously, as our view changes, we will change our allocation. This could be a good light house for investors to follow the dharma of asset allocation

Overall, the weather in CY26 may be cold and windy with occasional storms, but the pitch is well-prepared with strong fundamentals. Players with the tenacity to grind through sessions-staying invested for the long haul-stand to make meaningful money. Patience, diversification, and quality focus will reward those who play the full Test match.

(The author is the MD of Kotak Mahindra Asset Management)