Domestic capital markets have recently underperformed relative to their global counterparts, prompting Motilal Oswal Private Wealth to adopt a neutral outlook on Indian equities. This cautious stance is attributed to ongoing geopolitical uncertainties linked to the conflict in the Middle East, high crude oil prices, and a noticeable slowdown in earnings growth.
Despite these challenges, the overall macroeconomic environment in India remains robust. Mid and small-cap stocks have shown considerable resilience, outperforming large-cap stocks since the onset of recent geopolitical tensions. As a result, Motilal Oswal Private Wealth has chosen to maintain an overweight position in the mid and small-cap sectors to leverage this strength.
In its Alpha Strategist report for May 2026, the brokerage recommended a structured investment allocation: 50% in hybrid or large-cap stocks, 40% in mid and small caps, and 10% in global equities. While retaining a neutral view on the broader equity market, the firm advocates for a gradual investment approach to pure equity strategies. Within fixed income, it anticipates that interest rates will remain elevated for an extended period, encouraging strategies focused on cash flow and accrual in light of resurging global inflation risks.
Additionally, the firm holds a neutral stance on gold and silver, favoring gold due to persistent central bank purchases and the reduction of speculative activity in global gold markets.
“Global markets in 2026 are increasingly influenced by AI-driven earnings and the infrastructure cycle, with technology-centric economies like South Korea and Taiwan leading the upward trend, while India exhibits resilience through strong domestic macroeconomic fundamentals,” remarked Ashish Shanker, MD & CEO of Motilal Oswal Private Wealth. He emphasized that record GST collections and indications of rural recovery are crucial components of India’s investment-led growth narrative.
Sandipan Roy, Chief Investment Officer at Motilal Oswal Private Wealth, noted that despite uncertainties in the global landscape and foreign institutional investor (FII) hesitance towards Indian markets, the sturdy macroeconomic fundamentals in India, stable growth outlook, and improving corporate balance sheets support a positive long-term investment perspective. He advised investors to prioritize disciplined asset allocation and gradual portfolio enhancement, rather than react to short-term market fluctuations.
Published on May 29, 2026.
