S Naren, Executive Director and Chief Investment Officer at ICICI Prudential Mutual Fund, described 2025 as a “year of hibernation” for Indian markets, despite the country’s strong macroeconomic fundamentals. India maintained low fiscal and current account deficits, controlled inflation, and saw healthy economic growth.
However, Indian equities did not perform well, and the rupee lagged behind most global currencies, including the US dollar. Looking forward to 2026, Naren is optimistic about Indian markets, believing they are positioned to outperform many global markets in the upcoming year.
Naren emphasized India’s strong growth potential over the next decade, driven by favorable demographics and long-term economic prospects. He advised investors to focus on proper asset allocation rather than short-term gains, suggesting a slightly higher equity allocation in portfolios compared to early 2025.
While cautioning against increasing exposure to precious metals due to stretched valuations, Naren highlighted the significant outperformance of gold and silver compared to equity indices. He also warned about high global risks, particularly overvaluation in US technology stocks and excessive optimism in precious metals.
In light of these factors, Naren stressed the importance of a balanced and cautious investment strategy that combines growth opportunities with risk management as markets move into 2026.
