Asset X | August 2026: Key Signals Across Asset Classes

Earnings strength anchored domestic equities this past month, even as global markets wobbled on rate uncertainty and AI capex concerns. Fixed income stayed supported by fresh FPI-friendly measures, while alternates saw investors turn more selective on valuations. The rupee remained the outlier, pressured by geopolitics and oil dependence, though FPI flows kept the downside contained.

In this edition, AssetX breaks down these moves across equities, alternates, fixed income, commodities, and currency and what they mean for portfolio positioning going forward.

Equities

Domestic equity markets: The June quarter earnings season has been encouraging, with nearly 60% of the Nifty 500 companies having reported so far and delivering a median profit growth of 19% YoY. Earnings remain broad-based, with the geopolitical impact largely confined to sectors such as OMCs and airlines. Valuations also remain reasonable, with the Nifty 500 trading at a trailing P/E of around 23X, below its 10-year median of 27X, while the rupee has stabilized. We continue to remain constructive on domestic equities, with a preference for financials and metals, along with a slight bias towards mid and small-cap stocks.

Global equities have been volatile in the recent period as uncertainty around the interest-rate trajectory and questions over ROI of the AI-driven capex cycle weighed on investor sentiment. US markets witnessed increased allocation to defensives as well as large caps, while China witnessed renewed inflows as South Korea experienced major froth erosion. Given increased exposure to AI and related themes we recommend adding portfolio stabilizers to manage any future volatility. New allocations can be considered through a well-diversified mix of developed markets, including the US, and select emerging markets outside India.

Alternates

Rapid advances in AI, space and defence technologies continue to drive investor interest acrossUnlisted 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 see a steady growth path with Bangalore, Delhi NCR & Mumbai markets leading the charge.

Fixed Income & Commodities

Domestic debt markets: Bond yields have found support from measures announced by the RBI and the Government to attract higher FPI inflows into domestic debt in June 2026. Additionally, the RBI's neutral policy stance and the absence of any immediate need for rate hikes should help keep yields supported. That said, persistently elevated US Treasury yields & potential rate hikes in the US could exert some upward pressure on domestic bond yields.

In Commodities, we remain incrementally more constructive on gold over silver. The supply squeeze in silver appears to be easing, creating a near-term headwind for prices. Additionally, in a higher interest-rate environment, silver is likely to face greater downside risks than gold.

Currency

INR in the past month traded with a depreciative bias amid renewed geo-political tensions. Higher oil dependence could continue to weigh on INR, however, sustained FPI flows could limit the downside risk. We expect INR to move in a band of 90-96/USD.

The Second Opinion: The biggest risk for investors today may not be volatility, it may be reacting to it. With different asset classes being driven by different forces, short-term market moves can often distract the investors from the bigger picture. As earnings remain resilient and macro fundamentals stay supportive, we believe disciplined asset allocation and selective diversification are likely to create more value than attempting to time every market swing.

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This communication is for informational purposes only and does not constitute investment advice. Please refer to the full disclaimer in the Asset X report dated August 5th, 2026.