Radhika Gupta: Prepare for 2026's 'Unknown Unknowns', Not Predictions

Geopolitical Shocks Set Stage for 2026

Markets are refusing to settle into a clear trend as 2026 begins, marked by geopolitical shocks and persistent headline risk. Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, stated on NDTV Profit that this is no ordinary market cycle, warning that global politics has become a primary driver, not mere background noise.

Domestic India Offers Predictability

Gupta divides the year into three parts, with domestic Indian factors being the most stable. She believes the worst of the domestic slowdown has passed, citing completed tax reforms, easing financial conditions, and early signs of earnings recovery as positive indicators.

Unfinished Global Business and 'Unknown Unknowns'

The second force is unresolved global trade tensions carried over from the previous year. However, the most concerning element is what Gupta terms "unknown unknowns"—unforeseeable events that increasingly dictate short-term market movements, defying traditional models and forecasts.

2025 Resilience Amidst Turmoil

Despite significant headwinds like geopolitical tensions, earnings downgrades, and foreign investor selling, benchmark indices saw only a 5-10% decline in 2025. Gupta noted this resilience, suggesting a harsher market environment in a different era might have led to a 30% fall.

SIP Flows Cushion Market Falls

The key to this resilience lies in domestic capital inflows. Monthly Systematic Investment Plan (SIP) flows have surged to nearly ₹30,000 crore, providing a consistent buyer base that softens sharp market corrections. While corrections will still occur, Gupta suggests they will be measured by time rather than drastic price drops.

Dispelling Investor Myths

Gupta strongly advises against an obsession with short-term returns, calling one-year performance chasing detrimental to long-term goals. She also labels inflated return expectations as misguided, deeming 11-12% annual equity returns as realistic, not conservative, with post-Covid highs being an anomaly.

Focus on Preparation, Not Prediction

For 2026, Gupta's unfashionable advice is to prioritize preparation over prediction. She emphasizes that asset allocation, diversification, and realistic expectations are far more critical than chasing specific sectors or themes. Humility in acknowledging limited predictive ability, contrasted with strong preparation capabilities, is paramount for investors.