What we are seeing

Domestic Equity markets look incrementally favourable, supported by improving macros and visible recovery in corporate earnings. Finalisation of trade deal with the US could further strengthen sentiment. Going forward, we expect some broadening of the financial markets.

Within sectors, we retain our sector bias towards industrial metals amid USD weakness, structural supply deficits and potential revival in the global economy. Also, chemicals look incrementally favorable given improved currency competitiveness vis-à-vis CNY + lower tariffs than China.

Global Equity markets continue to be an important lever for diversification. While US is still the core position, modest valuations, consistent DXY weakness and improving fundamentals mean that World (ex-US) especially Emerging Markets (ex-India) look favorably positioned.

Alternates

Rapid advances in AI and defence technologies continue to drive investor interest across Unlisted Equities, including deep-tech PE and VC. However, recent IPOs listing below pre-IPO valuations have tempered appetite for late-stage private deals. The preference is shifting towards companies still two to three years from listing, where entry valuations and risk-return trade-off may be more reasonable

Commercial Real Estate is the space where we continue to see steady growth across most cities (except Kolkata, Ahmedabad & Hyderabad which require deliberate monitoring)​

Fixed Income & Commodities

Domestic Debt markets have seen some short-term volatility largely driven by global factors. We expect further liquidity infusion and rate cuts both by RBI and the US Fed to be supportive for domestic yields.

In Commodities, both gold and silver continue to have strong fundamental drivers, however the parabolic upswing in the silver markets has recently corrected and could see further downside, demanding higher discipline. Gold though corrected from the peak, holds a strong ground and could continue be a good hedge against geopolitical tensions.

Currency

INR continues to be one of the worst performing key currency, however, incremental improvement in fundamentals, finalization of trade deal with the US and potential betterment in the capital account could support INR going forward. We expect limited depreciation from hereon and expect USD/INR to be in the range of 88-92.

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