In its latest Alpha Strategist May 2026 report titled “Down, But Not Out”, the wealth management firm said Indian capital markets have underperformed some global peers in the near term, but the broader economic outlook for the country remains stable.
The firm recommended a portfolio allocation of around 50% towards hybrid strategies and large-cap equities, 40% towards mid- and small-cap (SMID) stocks, and 10% towards global exposure.
It also advised investors to adopt a staggered investment approach for pure equity-oriented strategies while deploying lump sum investments in hybrid strategies.
According to the report, SMIDs have outperformed large caps since the onset of the Middle East conflict, reflecting relative resilience amid geopolitical uncertainty and market volatility.
On fixed income, Motilal Oswal Private Wealth said interest rates may remain elevated for longer as the Reserve Bank of India has signalled a pause in the rate-cut cycle, while inflation risks remain due to higher crude oil prices, currency volatility and geopolitical tensions.
The firm said it continues to prefer cash flow-focused accrual strategies across the credit spectrum, adding that any renewed pressure on crude oil prices or the rupee could lead to higher bond yields.
The report also maintained a neutral stance on precious metals, with a preference for gold over silver, supported by continued central bank purchases and easing speculative activity in global gold markets.
Ashish Shanker, MD and CEO of Motilal Oswal Private Wealth, said India’s macroeconomic fundamentals, including healthy GDP growth, stable inflation, strong foreign exchange reserves and improving corporate balance sheets, continue to support long-term confidence despite near-term pressures from geopolitical developments and slower earnings momentum.
Sandipan Roy, Chief Investment Officer at the firm, said investors should focus on disciplined asset allocation and gradual portfolio building rather than reacting to short-term market volatility.
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