Investment Ideas Note – January 2026 – Wallet Wealth

Market Review

2025 marked a tumultuous year for Indian markets specially driven by US trade & tariffs policy.

For the month of December BSE Sensex delivered a nega6ve return of 0.49% whereas BSE midcap and BSE small cap delivered a nega6ve return of 0.35% and 1.06% respec6vely.

Index Performance –December 2025

Index	1st Dec 2025	31st Dec 2025	Change
BSE SENSEX	85642	85221	-0.49%
BSE MIDCAP	47122	46954	-0.35%
BSE SMALL CAP	52080	51525	-1.06%

During the month of December, markets initially sustained posi6ve momentum, however late in the month there were extended losses with profit booking and foreign fund outflows were pushing the benchmarks lower.

Monthly Returns (%):

Index	December returns
NIFTY 50	-0.17%
NIFTY MIDCAP 150	-0.43%
NIFTY Bank	-0.17%

Nifty 50, Nifty Midcap and Nifty Bank also delivered lower returns for the month of December.

FII & DII Flows – December 2025

Category	Equity (Cr)	Debt( Cr)	Net Flow
FII	-23824.75	615.25	-24440
Mutual Funds (DII)	37787.1	-34732.25	3054.85

DIIs provided sporadic support but could not fully reverse the broader range bound trend.

The FII’s were booking profits during the month of December which shows huge nega6ve cashflows from the FII’s and on the other side, the DII’s were bullish in purchase.

Macro-Economic Dashboard – India (as of December 2026)

Indicator	Latest Reading	Trend / Insight
RBI Projection GDP Growth FY26	~7.3%	The outlook is supported by strong agriculture, GST rationalisation, benign inflation, healthy corporate balance sheets and accommodative monetary conditions.
CPI Inflation – Nov-25	~0.71%	Moderating food inflation; RBI maintains vigilance
Core Inflation – Oct-25	~3.64%	Benign core keeps policy path stable
Repo Rate – Dec'25	5.25%	RBI cut the repo rate by 0.25% in Dec-2025
PMI Manufacturing – Dec-25	~55	This marks the weakest improvement in two years, as factory output expanded at the slowest pace since October 2022
PMI Services Dec-25	~58	Growth was moderated by competition from alternative providers offering cheaper services.
GST Collections (Nov '25)	~₹1.74 lakh cr	Consistent strength, reflects healthy consumption/formalization
Forex Reserves	~$696bn	Comfortable reserve cover; supports currency stability

As of December 2025, India’s macroeconomic indicators point to a resilient but gradually moderating growth environment. GDP growth for FY26 is projected at a robust ~7.3%, supported by strong agricultural performance, stable inflation, healthy corporate balance sheets, and supportive monetary condi6ons.

Inflation remains benign, with CPI at ~0.71% in November 2025 and core infla6on around ~3.64%, allowing the RBI to cut the repo rate by 25 bps to 5.25% in December, reinforcing a growth-suppor6ve stance.

However, high-frequency indicators suggest some moderation in momentum—manufacturing PMI at ~55 reflects the weakest expansion in two years, while services PMI at ~58 indicates steady but compe66ve growth pressures.

On the fiscal and external fronts, GST collections of ~₹1.74 lakh crore highlight sustained consumption and formalization, and forex reserves of ~$696 billion provide strong external stability and currency support. Overall, the data depicts a fundamentally strong economy navigating a phase of normalization rather than slowdown.

How Equity market fared in 2025

Sensex Return In the CY-2025

Index	1^st Jan 2025	31st Dec 2025	Change
BSE SENSEX	78507	85221	8.55%
BSE MIDCAP	46675	46954	0.60%
BSE SMALL CAP	55750	51525	-7.58%

The reasons for the downturn

1) India-Pakistan conflict and subsequent ceasefire

2) Recession fears due to imposi6on of US tariffs

3) India underperformed global peers due to high valua6ons

4) Persistent FII pullout-1.6 Lakhs crore during the calendar year(Jan-Dec 2025)

5) Time correc6on was evident as Indian markets underperformed major global peers. FII flows con6nued to remain lacklustre.

6) The Indian Rupee recently slipped past the psychological 90 INR/USD mark against the US Dollar, touching a new low.

What is there in the Card for the Year 2026

1) India’s services exports grew at one of the fastest rates in the last 2 decades.

2) India’s consump6on story remains structurally strong with a clear shift towards premiumiza6on, underpinned by rising incomes, expanding disposable surplus and comfortable infla6on levels.

3) Favorable liquidity and rich valua6ons have kept the IPO pipeline robust. Un6l the IPO markets cool-off, markets may remain under pressure.

4) A combina6on of fiscal stimulus (Direct tax cuts + GST rate cuts) & monetary stimulus (RBI rate cuts) bodes well for already healthy demand environment.

5) risks like high global valua6ons & US AI op6mism s6ll remain

6) India’s real GDP growth grew by 8.2% in Q2 FY26 mainly due to strong domestic demand despite global challenges. 2026-27 Q1 and Q2 are projected at 6.7% and 6.8%

7) CPI infla6on is forecasted at 2% for FY26. Overall the outlook for infla6on remains stable

RBI Monetary Policy

The MPC unanimously reduced the policy repo rate by 25 bps to 5.25% in the December 2025 policy review. Consequently, the standing deposit facility (SDF) rate was lowered to 5.00%, and the marginal standing facility (MSF) rate and the Bank Rate to 5.50% each.

Outlook on Gold & Silver

Precious metals delivered extraordinary returns in 2025, outperforming equity markets by a considerable margin. Gold surged by approximately 81% on the MCX, rising a record high of ₹1,40,465 per 10 grams in late December. This rally was mainly driven by aggressive central bank accumula6on, persistent geopoli6cal instability in regions like Ukraine and the Middle East, and the cumula6ve impact of US Federal Reserve rate cuts.

Silver drama6cally outperformed its yellow counterpart, delivering a staggering 165% to 172% return year-to-date and scaling a historic peak of ₹2,54,174 per kg on the MCX.

The gold price will surge if the investor interest continue, rate cuts, tariff war and the geo-poli6cal tension con6nues.

On the other side, if the growth stabilizes, inflation threats and the yield increases, the demand for gold decreased and the price would be correcting. As per the Goldman Sach’s prediction, the 24 K Indian Gold Price would move between 1,45,000 – 1,55,000 for 10 grms in 2026.

Why Financial planning

The PGIM India Mutual Fund Retirement Readiness Report 2025 highlights a paradox in India’s financial behavior: while re6rement planning has emerged as the number one financial priority, actual preparedness has deteriorated sharply. Only 37% of Indians have a retirement plan, down from 67% in 2023, even as financial anxiety has risen to 46% due to higher living costs, healthcare expenses, and family responsibili6es.

Households are increasingly focused on short-term survival— EMIs, rent, and educa6on—at the cost of long-term wealth crea6on. A growing dependence on family support post-re6rement (42%) further underscores the fragility of tradi6onal safety nets and the urgent need for structured, self-driven re6rement planning.

The summary is hereunder

Key Indicator (2025)	Finding	Change vs 2023
Retirement as No.1 Priority	Ranked #1 among financial goals	↑ from Rank #6
Individuals with a Retirement Plan	37%	↓ from 67%
Financial Anxiety Levels	46% report high stress	↑ from 32%
Dependence on Family Post-Retirement	42% expect family support	↑ from 24%
Individuals with Alternate Income	25%	Low, critical gap
Individuals with Both Plan & Alternate Income	14%	↓ from 26%

Source: PGIM India Mutual Fund Retirement Readiness Survey 2025

Investment Strategy – Our View Equity Allocation View

• Market-cap-to-GDP 140% → avoid lumpsum, stagger over 20–24 weeks o Interpretation: Markets remain above historical average but justified by earnings strength, formalization, and financialization of savings. Valuations require disciplined & staggered deployment.

• Preferred themes:

o Large-cap & Hybrid funds for stability o Banking & Financial → tactical exposure o IT & Digital → Contrarian Approach

• Avoid fresh small-cap allocation unless 7+ year horizon Debt Market – Dec 2025

• G-Sec: 10Y benchmark around 6.58%

• Context: RBI liquidity operations earlier in the year and stable policy stance keep duration risk manageable; FPI bid in debt has stayed supportive. Debt Allocation View

• <1 Year: Money Market / Ultra-Short Funds

• ~3 Years: high-quality corporate bonds

• Avoid Credit Risk segment due to vola6lity

Gold Outlook

Long-term portfolio: Maintain a core alloca6on (10%) in gold — as a hedge, store of value, and portfolio diversifica6on tool (especially in uncertain macro environment).

Accumulate on dips / corrections: Given vola6lity and poten6al short-term pullbacks, using cost averaging /SIP-like purchases may smooth entry & mitigate timing risk.

Short-to-medium term tac6cal calls: Near-term rallies may be exploited if global cues remain uncertain — but avoid over-exposure to gold-only bets (balance with debt/equi6es).

Combine with other assets: Use gold as a stabilizer in a diversified portfolio — pairing with equi6es, fixed income, or balanced funds to manage overall risk-return.

Contact Information

S.Sridharan, Founder, https://www.walletwealth.co.in/

For portfolio guidance, contact your advisor at 9940116967

Wallet Wealth LLP | SEBI Registered Investment Advisor

2nd Floor, No.8A, 2nd Main Road, Nanganallur, Chennai – 600 061 Ph: 044-48612114

Disclaimer

This document is confidential and intended solely for clients. Information is believed reliable but not guaranteed. Views are subject to change without notice and do not constitute investment advice without consultation.