Investment Strategy and Macroeconomic Outlook for 2026

This document is a report detailing the investment strategy and macroeconomic outlook for 2026. It outlines expectations for risk assets to outperform as economic growth broadens, inflation normalizes, and supportive monetary and fiscal policies are maintained. The report identifies three key themes for asset allocation: equities, bonds, and diversifiers. It emphasizes a positive outlook for Indian equities driven by a reflating economy and expected earnings revival, with a focus on large- and mid-cap equities, particularly in the consumer discretionary and financial sectors. The bond strategy favors short-maturity and corporate bonds over cash due to higher yields. Additionally, the report discusses the importance of diversifiers such as gold and multi-asset strategies to hedge against potential downside risks. It also highlights various domestic and external risks that could impact growth, including US tariffs and changes in AI policy. Overall, the report provides a comprehensive view of the investment landscape for the upcoming year.