Leading Indian fund managers maintain a heavy equity focus for 2026, prioritizing large-cap stocks to anchor portfolios. Despite global economic uncertainties, experts highlight domestic growth and corporate earnings as primary drivers. Investors are balancing these equity bets with strategic allocations to gold and debt for portfolio stability.
Indian equity markets continue to be the primary focus for institutional and private wealth managers as they unveil their model portfolios for 2026. Despite ongoing geopolitical tensions and global economic unpredictability, top investment professionals maintain a constructive long-term view, anchored by the belief that domestic corporate earnings will drive performance rather than market valuation expansion.
Large-Cap Stability and Mid-Cap Growth
Asset allocation strategies from major firms indicate a preference for large-cap stocks as a stabilizer for investment portfolios. Anand Shah, CIO of PMS and AIF at ICICI Prudential AMC, continues to anchor portfolios with large-cap stocks while keeping his equity allocation steady. He points to domestic consumption patterns and healthier corporate balance sheets as key supporting factors for this strategy. Similarly, Brijesh Ved, Head of PMS at Kotak Mahindra AMC, supports a growth-oriented approach, noting that a sustained cycle of money spent on infrastructure and projects, combined with robust domestic demand, justifies a calibrated increase in mid- and small-cap segments.
Other strategies show a slight pivot in asset distribution. Sandipan Roy, CIO of Motilal Oswal Private Wealth, has adjusted his approach by moving some large-cap exposure into hybrid funds. He is focusing more on mid- and small-cap stocks, citing their potential to benefit from long-term trends such as digitalization. Meanwhile, market veteran Ajay Bagga keeps 60% of his capital in India, highlighting that valuations in the large-cap space have cooled down to more reasonable levels compared to previous periods.
Role of Gold and Diversification
Fund managers are consistently using gold and debt instruments as a form of volatility insurance. Allocations to gold and silver are being maintained to hedge against global inflation and geopolitical risks. For many, debt instruments provide the necessary stability to balance the higher risk profile of equity-heavy portfolios. While equities are expected to capture growth from India's structural transformation in sectors like manufacturing and logistics, these traditional diversifiers remain essential for managing downside risk.
Sector Outlook and Future Triggers
Investment focus remains spread across a wide range of sectors, including private sector banks, insurance, capital goods, infrastructure, power, healthcare, and export-oriented manufacturing. Deven R Choksey of DRChoksey Finserv has outlined a concentrated view, with significant weightings toward financial services and industrial energy sectors. Market observers are also tracking the potential impact of upcoming large-scale initial public offerings, which could influence future liquidity and sector-specific valuations.
The next major phase for investors will involve monitoring corporate quarterly results to see if the earnings growth expectations held by these fund managers materialize. Additionally, movements in global commodity prices and any changes in interest rate policies will be critical, as these factors significantly influence the margins and profitability of the industrial and manufacturing companies currently favored in these model portfolios.