Quote on 2026 outlook by Vijay Kuppa, CEO, InCred Money
Below the Quote on 2026 outlook by Vijay Kuppa, CEO, InCred Money
2026 arrives with a familiar set of risks that deserve our attention: an inverted U.S. yield curve that has historically signalled slowdowns, meaning markets are pricing in near-term stress even if timing is uncertain.
Global liquidity risks have also shifted; the unwinding of the yen carry trade and rising Japanese bond yields can quickly tighten cash flows and force portfolio rotations. That raises the odds of sharp moves across stocks, currencies and commodities.
At home, ultra-low headline inflation driven by weak food prices can be misleading. If deflationary demand, not productivity gains, is the cause, nominal growth and corporate earnings may struggle to keep pace.
Currency and flow risks matter too: the rupee crossed the 90/$ mark in December amid heavy portfolio outflows, which amplifies input-cost pressure for importers and squeezes margins.
Finally, valuations and foreign flows are a real watchpoint, RBI analysis shows markets need strong earnings to justify current prices, even as FIIs took meaningful money off the table in 2025.
But among all these, the biggest uncertainty for 2026 is U.S. trade policy.
Higher tariffs on Indian exports don’t just affect a few sectors. They influence currency stability, corporate margins, investor confidence and global capital allocation. Trade policy shifts can reprice risk overnight — and markets hate that kind of uncertainty more than bad news itself.
Despite these risks, reasons to be constructive remain: India’s growth profile is stronger than many peers, policy buffers are meaningful, domestic savings and SIPs continue to provide steady demand, and selective sectors (infrastructure, digitisation, renewables) offer long-term opportunity.
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