2026: Conviction Over Courage

There are phases in the market when the indices look busy, but portfolios go nowhere. The last fifteen months have felt exactly like that for most of you. If you are an investor wondering whether all the effort, anxiety and patience were worth it, you are not alone. I have seen many such phases in my years in the market, and they usually arrive just before investors are forced to rethink how and why they invest.[EasyDNNnews:PaidContentStart]

The year 2025 was not kind to emotions. It was a year of sharp swings, global uncertainties and constant noise. Headlines changed daily, narratives flipped weekly, and yet the market, in aggregate, ended up moving sideways with slight upside. As we step into 2026, the mood is no longer euphoric, but it is far from pessimistic. What I sense instead is cautious optimism, the kind that rewards thinking investors and punishes impatience.

What gives me confidence is not a forecast for the next quarter or the next result season, but a far larger idea that often gets lost in day-to-day market chatter. India is not merely growing; it is transforming. The journey from a roughly USD 4 trillion economy today to a USD 8 trillion economy over the next seven to eight years is not a bold slogan. It is a structural shift. When an economy doubles in size, wealth creation does not happen in a straight line, but it does happen decisively.

If you strip away the noise, this single belief must anchor every long-term equity investor. If one does not believe in India’s growth trajectory, then equity investing becomes speculation. If one does, then temporary stagnation, corrections and even bad years become part of the process rather than reasons to exit.

That said, optimism does not mean blindness to risk. The market in 2026 will not be free of headwinds. One of the most visible concerns remains the unresolved tariff and trade uncertainty with the United States, which has kept foreign investors cautious. Alongside this, the sheer volume of new IPOs has created an oversupply of paper, pulling liquidity away from the secondary market. History already tells us that many recent listings have struggled to hold even their issue prices, reminding investors that excitement is not the same as value.

Valuations are another area where discomfort persists, particularly in mid- and Small-Cap stocks. Yet, valuation debates are rarely one-dimensional. Some segments may look expensive on the surface, but when viewed through growth-adjusted metrics, they are not as stretched as popular opinion suggests. The real risk, in my view, lies not in valuations themselves, but in expectations running far ahead of fundamentals.

Against this backdrop, where should you focus? Broad market returns are unlikely to be spectacular. This will be a year where selectivity matters more than speed. Financials continue to stand out, not just traditional Banks but also insurers, capital market intermediaries and niche lenders that benefit from formalisation and rising financial penetration. These businesses quietly compound as the economy expands. There are other sectors too where our team sees opportunity, and one of our special reports goes deep to cover these sectors.

If there is one lesson I would emphasise for 2026, it is behavioural rather than tactical. Set realistic return expectations. Equity does not need to deliver miracles every year to outperform other asset classes over time. Avoid leverage and short-term trading temptations. Boring, disciplined investing still creates the most enduring wealth. Most importantly, resist the urge to check your portfolio every day; markets reward patience far more reliably than activity.

As I look at 2026, I see a year that will test conviction more than courage. It will favour investors who understand where the economy is headed and are willing to stay invested despite temporary discomfort. The road to a USD 8 trillion India will not be smooth. For those who stay focused, it remains a journey well worth taking.

With that, I’d like to take this opportunity to wish each of you a very happy and prosperous New Year 2026.

RAJESH V PADODE
Managing Director & Editor

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