Ashish Shanker, MD & CEO, Motilal Oswal Wealth | Photo Credit:
Motilal Oswal Private Wealth expects investors to be better off by adopting a balanced approach with a higher tilt towards large caps and hybrids, and a staggered, selective allocation to mid- and small-caps this year.
It expects earnings to grow 12-14 per cent in the next fiscal, compared to 8-9 per cent in FY26. Domestic policy tailwinds, improving relative valuations, and the conclusion of trade deals should strengthen the outlook for the next fiscal year.
Market Underperformance
Indian markets lagged their emerging-market peers in CY25, as MSCI India underperformed MSCI Emerging Markets by 31 per cent in dollar terms.
Several concerns, including elevated valuations amid tepid earnings growth, the absence of a direct AI-led investment theme in India amid global markets chasing the AI narrative, and rupee depreciation, which contributed to the underperformance of Indian markets, are beginning to normalize.
Large Cap Advantage
Ashish Shanker, MD & CEO, Motilal Oswal Wealth, said large caps enter 2026 on a stronger footing with reasonable valuation and earnings visibility.
Mid & Small caps are in the downward momentum, which may create selective accumulation opportunities during the March quarter, he said.
Motilal Oswal Wealth expects the rupee to consolidate at the current level and foreign portfolio investors to return to the market after staying for the last two consecutive years.
Equity Market Analysis
Sandipan Roy, Director and Chief Investment Officer at Motilal Oswal Private Wealth, said that after two strong performance years, last year saw India’s equity market consolidate, with returns diverging across market capitalisations. While large caps delivered modest returns, mid-caps remained volatile, and small caps witnessed corrections.
However, domestic policy tailwinds, including interest rate cuts, tax relief to boost consumption, GST slab rationalization and sustained RBI liquidity support, are expected to translate more meaningfully into growth and earnings, he said.
Investment Guidance
Motilal Oswal Private Wealth believes that investors should stay true to their Investment Charter, remain neutral on strategic asset allocation, and stay patient through short-term volatility, while being driven by long-term investment objectives.
Despite the recent rally in gold and silver prices, Motilal Oswal Private Wealth recommends that investors gradually accumulate gold during sudden market dips. Investors should partially book profits in silver, it said.
Published on February 4, 2026