Fund managers urge diversification amid AI and valuation concerns

ET BureauLast Updated: Jan 01, 2026, 06:34:00 AM IST

Synopsis

Indian equity investors look forward to a calmer 2026. The Nifty is expected to gain between 8-14 percent. This optimism stems from anticipated corporate earnings growth in the second half of the year. Foreign fund flows are also expected to revive. A trade deal with the US is also a key factor.

As the curtain drops on a year of volatile trade, equity investors are pinning hopes on a calmer 2026. With the consensus in favour of the Nifty gaining 8-14% in the new year, as per a recent ET Markets poll, the mood is far more assured than it was early in 2025. It's underpinned by expectations of a recovery in corporate earnings growth in H2, foreign fund flows reviving and the India-US trade deal getting sealed.

Still, investors are not letting their guard down entirely as the risk-off sentiment toward India is yet to ease, with valuations staying pricey and uncertainty over burgeoning AI trade in the US. Adding to it is a strong IPO pipeline, as well as gold and silver as alternatives. Fund managers and investment advisers have one clear message: spread risk across stocks, hybrids, precious metals and fixed income.

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