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Below the Quote on How Markets Are Closing 2025 and Looking Ahead to 2026 by Ajay Menon, MD & CEO, Motilal Oswal Financial Services Ltd

Indian equity markets ended 2025 near record highs, with the Nifty gaining nearly 10% after a prolonged consolidation phase marked by global trade tensions, FII outflows and muted earnings growth. Resilient domestic fundamentals, RBI’s aggressive rate cuts and strong domestic investor participation helped stabilise markets and supported a year-end recovery.

The outlook for 2026 appears constructive, with steady market growth expected on the back of an earnings recovery, improving liquidity and a gradual revival in private sector investment. Large-cap valuations remain reasonable, while a selective, quality-driven approach is recommended in midcaps. The Union Budget 2026 is expected to be a key catalyst, particularly for consumption and investment-led sectors.

Key opportunities are likely to emerge in Financials, supported by healthy credit growth, improving return ratios and strong balance sheets. Consumption-oriented sectors such as automobiles and discretionary should benefit from improving demand, while Industrials and capital goods are well positioned on account of infrastructure spending and localisation initiatives. Healthcare offers defensive growth opportunity, and digital and e-commerce themes continue to provide long-term compounding potential. Overall, 2026 offers a favourable backdrop for disciplined investors focused on fundamentally strong businesses aligned with India’s long-term growth story.

Gold and Silver surged over the past year on the back of a powerful mix of macro stress, structural demand, monetary policy changes, and overall unrest. Meanwhile, silver, along with safe haven buying was also supported by industrial demand and physical tightness. We continue to believe these factors along with change in BOJ’s policy, change in Fed governor and ripple effect of tariff’s could be possible themes impacting bullion in 2026. ETF inflows could remain influential, while speculative positioning and macro drivers such as currency dynamics, and global growth prospects will dictate shorter?term trends.

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