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At Truemind Capital, our broad understanding has been:
- Fairness markets are anticipated to ship muted returns owing to expensive valuations
- Brief period debt funds will carry out higher on a risk-adjusted foundation within the debt class
- Gold might be an excellent portfolio hedge
Positioning our consumer portfolios primarily based on these expectations allowed us to yield constructive returns, which neither benchmark indices nor longer-term debt funds might.
Fairness Market Insights:
Indian fairness markets remained directionless through the October–December 2025 quarter. After a protracted correction by means of a lot of the 12 months, benchmark indices noticed intermittent recoveries however failed to ascertain a sustained uptrend. Over the quarter, markets largely moved inside a slender vary, reflecting consolidation moderately than a transparent directional development. Whereas indices ended 2025 in constructive territory, Indian equities continued to underperform a number of international friends over the trailing one-year interval.
On December 31, the BSE Sensex rose 545.5 factors to shut at 85,220.6, ending the 12 months on a agency be aware, rising 9% y-o-y. Nevertheless, this year-end rally did little to change the broader image. Market participation remained slender, with mid- and small-cap shares persevering with to face stress after sturdy multi-year good points. This was evident within the uneven efficiency throughout the broader market, the place returns have been pushed by choose pockets moderately than broad-based participation.
Globally, progress has remained resilient, however indicators of moderation have gotten extra seen throughout main economies. Whereas recession dangers seem contained for now, markets are more and more getting into a late-cycle section, the place returns are prone to be uneven and selective. Fairness efficiency continued to profit from ample liquidity and expectations of fee cuts, whilst geopolitical dangers, commerce negotiations and coverage uncertainty remained elevated. Towards the top of 2025, sentiment in US equities softened, with the S&P 500 ending December largely flat after a unstable month, reflecting extra cautious investor positioning.
Trying forward, company earnings progress has moderated meaningfully. After the unusually sturdy FY23-FY24 interval, revenue progress has cooled to excessive single digits, with income progress additionally remaining modest. Ahead expectations level to a extra measured progress setting, suggesting that the distinctive, liquidity-driven returns of the earlier cycle are unlikely to repeat within the close to time period.
Though valuations in Indian equities have corrected from earlier peaks, they continue to be above long-term averages, significantly in mid and small caps, limiting upside regardless of an bettering macro backdrop.
One necessary theme to look at globally is the sharp rise in AI-led investments, significantly in markets just like the US & South Korea, which have pushed a major share of latest capital spending and supported near-term progress. Nevertheless, the sturdiness of AI demand and the tempo at which these investments translate into sustainable money flows and investor returns stay unsure.
As well as, ongoing geopolitical developments, together with commerce coverage uncertainty, elevated fiscal deficits throughout a number of developed and rising economies, and rising geopolitical tensions, proceed so as to add to international danger. In such an setting, sturdy macro knowledge alone might not translate into broad market good points, reinforcing the significance of self-discipline and selectivity in fairness investing.
What we’re doing?
In opposition to this backdrop, we stay measured in fairness publicity. Portfolios are tilted in direction of large-cap and value-oriented methods, complemented by selective international publicity primarily in China equities for diversification, whereas avoiding aggressive thematic and momentum-driven allocations. We anticipate fairness returns over the medium time period to be extra modest and earnings-driven, making disciplined portfolio building extra necessary than chasing fashionable tendencies.
Debt Market Insights:
Debt markets remained energetic through the October–December 2025 quarter, with flows largely influenced by liquidity situations and seasonal elements moderately than any deterioration in credit score high quality. The short-term yields in India confirmed a light upward drift by means of This fall 2025 regardless of the repo fee lower by the RBI. This occurred primarily as a result of a tightening banking system liquidity from sturdy credit score progress outpacing deposits.
The Reserve Financial institution of India lower the repo fee by 25 foundation factors in early December, taking it to five.25%, as inflation remained benign and progress considerations persevered. On the similar time, the RBI continued to actively handle liquidity by means of open market operations and foreign exchange swaps to make sure easy transmission of coverage easing.
Nevertheless, bond markets confronted stress from elevated provide, significantly higher-than-expected state authorities borrowings. Because of this, long-term yields moved greater through the month, with the 10-year authorities bond yield briefly touching multi-month highs earlier than settling close to the 6.6% degree by the top of December. This bolstered the sensitivity of long-duration bonds to provide dynamics, even in an easing fee setting.
Globally, liquidity situations additionally turned extra accommodative. Within the US, the Federal Reserve introduced renewed purchases of Treasury payments to rebuild reserves within the monetary system, successfully injecting liquidity whilst coverage charges stay elevated. This return of balance-sheet assist exhibits the continued reliance of worldwide markets on central financial institution liquidity, significantly amid excessive fiscal deficits and late-cycle financial situations.
Our Method to Debt Allocation
At Truemind, we proceed to view debt as a stabilising part of portfolios moderately than a supply of return maximisation. Whereas rates of interest have begun to maneuver decrease, the expertise of the previous 12 months reinforces our choice for shorter-duration methods, which have delivered extra constant risk-adjusted outcomes in comparison with long-duration funds.
With long-term yields remaining delicate to provide dynamics and international developments, we consider the risk-reward trade-off for extending period stays unfavourable at this stage. Accordingly, our focus stays on short-duration and high-quality accrual methods that supply stability and liquidity.
From a post-tax perspective, arbitrage funds stay a related choice for traders in greater tax brackets, providing debt-like returns with comparatively environment friendly taxation.
Going ahead, whereas debt fund flows are anticipated to normalise as tax-related pressures ease, the trajectory of bond yields will proceed to be influenced by inflation tendencies, authorities borrowing, and financial coverage actions – each domestically and globally. On this setting, sustaining a disciplined, risk-aware strategy to debt allocation stays important.
Different Asset Courses:
Gold remained one of many strongest-performing asset lessons all through 2025, extending its good points into the latest quarter. The rally was supported by elevated international uncertainty, sustained central financial institution shopping for, and expectations of decrease actual rates of interest globally. Furthermore, foreign money weak spot in a number of markets additional bolstered gold’s position as a portfolio hedge. In line with our long-held view, gold has as soon as once more demonstrated its worth as a strategic diversifier moderately than a buying and selling asset.
The actual property sector, however, witnessed its weakest quarter since Q3 2021 by way of gross sales quantity, regardless of the festive season that often drives demand. This may be attributed to a market shift in direction of premiumisation, the place the whole worth of gross sales elevated even because the variety of items offered fell. Increased costs and tighter affordability have slowed transaction volumes regardless of regular demand in choose segments. Given its inherent illiquidity, lengthy holding intervals, and cyclical nature, actual property shouldn’t be the dominant part of 1’s total wealth technique.
Truemind’s Mannequin Portfolio – Present Asset Allocation
Private Finance Capsule:
Watch out for Costly Debt Investments
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