Mumbai, Feb 5 (IANS) Investors should maintain a balanced investment approach in 2026, positioning large caps or hybrids as the core allocation, complemented by staggered, selective exposure to mid and small caps, a report said on Thursday.
The report from Motilal Oswal Private Wealth recommended this approach due to "improving fundamentals and macro conditions across India’s equity markets."
India’s relative valuation standing has strengthened after a consolidation‑led 2025, "supported by improving valuations, early signs of earnings recovery, domestic policy tailwinds and the conclusion of a trade deal," the report added.
The brokerage recommended an indicative allocation of 50 per cent to large caps and hybrids, 40 per cent to mid and small caps, and 10 per cent to global markets, the report further said.
While the large caps are entering the year strong, supported by reasonable valuations and better earnings visibility, the mid and small caps are also presenting good entry point, the report said.
Regarding the Budget, the firm said that manufacturing incentives, boost for services, logistics improvement, and asset monetisation should improve the conditions for sustained profit growth of equities over the long term.
Regarding fixed income instruments, the firm suggested investors to maintain a short‑to‑medium duration bias, favour accrual‑based strategies and consider long‑duration G‑Secs at yield levels of about 6.8–6.9 per cent and 7.1–7.2 per cent for 10–15 year G-Secs.
It advised investors to allocate 45–55 per cent of fixed income portfolio to performing credit, private credit, selective infrastructure investment trusts (InvITs), real estate investment trusts (REITs), and non-convertible debentures (NCDs) for a minimum period of 3-5 years.
“Residential real estate is likely to deliver single-digit returns in 2026 amid low rental yield of 2-3 per cent. Future returns will depend more on micro-market selection, developer quality, and execution, rather than broad-based price appreciation,” the report said.
The brokerage advised investors to remain neutral on strategic asset allocation, and stay patient through short-term volatility, while being driven by long-term investment objectives.
--IANS
aar/na
