Aetram Research India - Market Outlook 2026 : 30.12.2025
Special Report
*1. Market Wrap-Up: End of 2025*
* Indian equity markets demonstrated notable resilience despite persistent global macro and geopolitical uncertainty
* Domestic liquidity continued to be the primary shock absorber for Indian markets
* The post-COVID liquidity-led structural uptrend, now five years old, remains intact
* A rare market divergence is visible:
Price action hovering near 52-week highs
Investor sentiment close to 52-week lows
* Markets have already discounted most adverse developments over the past 6–8 months
*2. Outlook for 2026: Strategic Assessment*
* Policy support and government-led initiatives are expected to aid earnings recovery
* Corporate earnings over the next few quarters are likely to justify current market levels
* Technical structures remain constructive on higher timeframes
* Equity outlook for 2026 remains positive, subject to key considerations
* Broad-based rallies are unlikely
* Selective, sector- and stock-specific exposure is essential
* Alpha generation, defined as the ability to outperform the market, will be driven by precision rather than widespread participation.
*3. Asset Allocation Debate: Metals vs Equities*
*Precious Metals (Gold & Silver)*
* Delivered Big returns in 2025
* Trade considered largely mature
* Fresh investments not advised at current levels
* Profit booking recommended in gold and silver
* Long-term holding (3–5 years) still acceptable for investors
*4. Base Metals (Preferred Theme)*
* Strong conviction on base metals:
* Copper | Zinc | Aluminium | Nickel | Lead
* Base metals trend still developing
* Expected to outperform over the next 12–18 months
Clear preference:
* Stay out of precious metals | * Stay invested in base metals
*5.What’s Next in Metals?*
* Rally expected to broaden:
* Ferrous metals
* Steel stocks may join
* Metals Index target: 11,800 | 12,000 | 12200
* Implied upside: 12–15% from current levels
*6. Preferred Sectors Going Forward*
* Banking | Metals | PSU stocks | Automobiles | Real Estate
*PSU Stocks: 2026 Theme*
* Strong conviction on PSU stocks for 2026
*Reasons:*
* Comfortable valuations
* Under-owned segment
* 18 months of consolidation completed
* Strong relative strength
* Attractive dividend yields
* Minimal geopolitical dependency
* Expect significant outperformance in PSU space
*7. FII / Global Flows Outlook*
* FIIs unlikely to return aggressively in the near term
* Reasons:
* Indian valuations expensive
* Better opportunities in other global markets
* Liquidity exit challenges in midcaps and smallcaps
* China viewed as a major opportunity for next few years
* Domestic SIP flows (₹30,000 crore / Per month) provide near-term stability
* Earnings growth crucial to sustain domestic inflows
*8. Clear Do’s & Don’ts for Investors in 2026*
*What to Do*
* Stick to quality and industry leaders
* Focus on comfortable valuation stocks
* Maintain a concentrated portfolio
* Start exploring global investing opportunities
*What Not to Do*
* Avoid speculative and adventurous stocks
* Avoid over-diversification
* Avoid IPO hype and valuation traps
*Disclaimer: This analysis is for educational purposes only and not financial advice. Please consult your financial advisor before making trading decisions.*
