From equities to gold and bonds: Master Trust's Puneet Singhania decodes strategy for 2026
2025 was a year market with modest gains, earnings pressure and valuation reset. Puneet Singhania, Director at Master Trust Group, shared his assessment of the year for Indian markets.
- Dec 22, 2025,
- Updated Dec 22, 2025 3:20 PM IST
2025 was a year market with modest gains, earnings pressure and valuation reset. Puneet Singhania, Director at Master Trust Group, shared his assessment of the year for Indian financial markets as he explains why elevated valuations, margin pressure, weak demand and uneven profitability led to market underperformance despite strong macro fundamentals, policy stability and domestic liquidity support.
Looking ahead, Singhania sees 2025 as a phase of consolidation and time correction, setting the stage for a more selective, earnings-driven market in 2026. He also shares insights on mid- and small-cap valuations, the rupee’s trajectory, prospects for export-oriented sectors, precious metals, bonds, and portfolio allocation strategies. Read the edited excerpts:
BT: How do you assess the performance of Indian equity markets in 2025 so far? What have been the key surprises or disappointments? Looking ahead, what macro or earnings variables will primarily drive markets in 2026?
Singhania: The Nifty 50 and BSE Sensex have achieved a year to date (YTD) return of 9.82% and 8.69%, respectively, marking steady progress in the wake of global uncertainties but the relatively small and uneven gains that Indian equities markets have delivered so far in 2025 fell short of the high expectations at the beginning of the year because of overvaluation, downgrades in earnings, and the tightening of liquidity conditions that indicate the whole market has clearly underperformed. The most obvious sign of underperformance has been the decline in the growth of corporate earnings to the single digits. The net margins in the banking sector contracted substantially in the wake of interest rate cuts, and the non-performing loans accelerated in the consumer and credit cards business. IT companies’ performance was poor on the back of declining US business and layoffs. The fall in the rupee has further diluted the profit margins in foreign currencies.
Factors are a benign monsoon supporting rural sentiment, consistent liquidity infusion by the RBI, strong macroeconomic fundamentals, with GDP growth above 7.5% and manageable inflation ranging around 2%, Domestic inflows offset FII exits, and simplification of the GST and policy stability post-election have been the major pluses. Macro economically, steady inflation and continued public spending were advantages, but a severe disappointment was the uneven growth in corporate earnings.
India's macro setup for 2026 is characterized by steady growth, disinflation, and accommodative policy, fostering an environment conducive to equity expansion. Healthy monsoons support rural consumption recovery. A US-India trade deal resolution could act as an export catalyst. In 2026, markets are expected to be driven by earnings recovery rather than valuation expansion, with key variables including corporate profit growth, interest rate direction, global liquidity, FII flows, crude oil prices, and currency stability. All things considered, 2025 has been a year of consolidation and time correction, laying the foundation for a more selective, earnings-driven market environment in 2026.
BT: Mid- and small-cap stocks have underperformed sharply this year. Do you expect this trend to persist, or are valuations now attractive? What triggers could lead to a sustained rebound in the broader market?
Singhania: Indian mid and small-caps have undoubtedly been quite weak in the current year 2025, with the Nifty Midcap 150 gaining only 4.75% YTD and the Nifty Smallcap 250 declining 7.57%, compared to the Nifty 50 gain of 9.82%. However, this run does not look sustainable into 2026, with the PEs having normalized to more reasonable levels Midcap 150 at 33x, Smallcap 250 at 28.5x , down from peaks above 40x and above 35x respectively. If the earnings of December and the March quarter start stabilizing and improving, the stocks, which were corrected 40-60% even when they had “stable fundamentals,” could well rally back. The valuation multiples of quality mid-cap stocks are normalized and moved towards historical averages due to the de-rating in 2025.
In the near future, the underperformance may persist, particularly if global liquidity remains tight and risk appetite is cautious. Still, the market's overall medium-term outlook continues to improve better. A number of factors are expected to result in a sustained rebound in mid- and small-caps. First, investor confidence would be rebuilt by a clear improvement of earnings growth, particularly in manufacturing, capital goods, infrastructure ancillaries, and consumption-linked sectors. Second, both domestic and international interest rate stability and easing would provide liquidity while encouraging risk-taking. Third, a strong catalyst might be an upsurge of FII flows, backed by relative value comfort and currency stability.
BT: The Indian rupee has weakened significantly, breaching the 90-per-dollar level. Where do you see the currency stabilising over the medium term, and which sectors or investment themes could benefit from a weaker rupee?
Singhania: The weakening of the Indian rupee and the breach of the Rs 90-per-dollar level, reflects both global and domestic factors rather than any single structural concern. The pressure on Indian rupee is being worsened by a strong US dollar driven by global interest rates, irregular risk-off sentiment, high crude oil prices and uneven capital flows. If there isn't a significant increase in oil prices or financial strain on the world economy, the rupee is expected to stabilize in a range of Rs 88–92 in the medium term. Even if short-term volatility continues, India's controllable current account deficit, foreign exchange reserves, steady inflation, and GDP growth should reduce the risk of depreciation.
A declining rupee creates opportunity for various sectors from an investment perspective. Export-oriented industries stand to gain the most, especially IT services, pharmaceuticals, specialty chemicals, textiles, and engineering goods. These industries support margin improvement as a substantial portion of their revenues are dollar-linked but their expenditure remains largely rupee-based. The companies to profit from currency depreciation are the ones with robust global order books and pricing power. However, industries that rely heavily on imports, like aviation, oil marketing firms, and several capital goods categories, may encounter pressure on their margins. Broadly, a declining rupee supports export-driven manufacturing and Make-in-India suppliers but investors should continue to be cautious when investing in import-heavy or indebted companies.
BT: Delays in the US–India trade agreement have impacted market sentiment. Do you expect progress in the near term? If delays continue, what could be the implications for Indian equities, particularly export-oriented sectors?
Singhania: The US and Indian trade negotiations are progressing steadily, and there is hope on both sides for reaching a trade agreement soon. In light of the noticeable progress on the negotiation side and the high political momentum on both sides, we see progressive breakthroughs in the near term ahead. As far as market dynamics are concerned, the US-India trade agreement impasse is more of a market sentiment issue than an outright market-stopping event, and even the timing counts in this regard. Progress on both sides, even if on various smaller aspects other than a broad trade agreement, is likely to trigger positive market reactions, as mere transparency itself is an antidote for risk premia.
Nonetheless, should delays carry on, Indian equities, particularly those with an export focus such as IT services, textiles, and pharmaceuticals, could face the challenge of short-term headwinds related to uncertainties in tariffs and market access.
BT: Gold and silver have emerged as top-performing asset classes in 2025. What factors have driven this rally, and do you expect the trend to continue? How should investors approach precious metals from a portfolio allocation perspective?
Singhania: The precious metals market has been performing exceptionally well in 2025. Gold and silver prices have moved dramatically upwards. The prices of gold and silver in 2025 can be termed as nothing but spectacular. Gold prices are up over 60% in 2025, while silver prices are up a staggering 120%. The rise in gold prices in 2025 can be termed as a non-speculative movement. The current rise in the prices of gold can be attributed to various reasons. These include international tensions as well as aggressive buying of gold from central banks across the globe. The aim of buying is to strengthen their reserves.
Faithful to its nature, gold has once more hogged the limelight as a haven asset, attracting investors during periods of uncertainty and economic stress. Central banks all over the world being the largest source of demand for gold are likely to continue the strategic reserves buying which may offer consistent demand in the coming period. Silver, however, is an essential metal in today's world which finds extensive application in electronics, solar panels, batteries, and semiconductors. With technology evolving and the need for electronics, green energy infrastructure, and semiconductors rising, the silver price up move is likely to remain strong.
For Investors who are looking to get exposure to the above two classes, a well-balanced strategy is a must which involves gold for safety and silver for potential growth. This diversification helps not only mitigating the risk but also enhances the return of the portfolio. For those investors who wish to get exposure to these metals, taking a staggered investment route through gold/silver ETFs or mutual funds will be an efficient means of dealing with volatility and possible corrections following such a dramatic rally while still capturing long-term trends. Investors should treat precious metals as a strategic hedge—allocating 5–10% of portfolios to gold for stability and a smaller tactical allocation to silver for growth-oriented.
BT: What is your outlook on the bond market in a falling interest-rate environment? Should investors increase exposure to fixed income, and what proportion of a portfolio would you recommend allocating to bonds?
Singhania: In a falling interest-rate scenario, the bias remains positively structured; however, equity-oriented investors tend to overlook this fact. In a falling interest-rate scenario, the bias remains positively structured. Historically speaking, the most favorable period for bonds emerges when rate reductions are about to happen or occur in the initial stages of the interest-rate reduction process when yields initially start to soften but are still relatively high. This period offers investors benefits in the form of stable coupons as well as appreciation in prices due to rising prices. Generally, longer sovereign and investment-grade bonds will be most positively influenced when interest rates start to soften. Bonds act as a stabilizing agent in equity markets when markets are in a late-cycle or risk-off phase.
The bond market overall has an optimistic outlook for accrual-based returns and diversification strategies. However, the phenomenal performance experienced in 2025 will not be easily replicable. There shall be a return to mid-single-digit performance in terms of returns on investment. In terms of allocation, conservative investors may think about 40% or more, depending on age, income stability, and return expectations, while moderate risk investors could consider a 20-25% exposure to fixed income.
2025 was a year market with modest gains, earnings pressure and valuation reset. Puneet Singhania, Director at Master Trust Group, shared his assessment of the year for Indian financial markets as he explains why elevated valuations, margin pressure, weak demand and uneven profitability led to market underperformance despite strong macro fundamentals, policy stability and domestic liquidity support.
Looking ahead, Singhania sees 2025 as a phase of consolidation and time correction, setting the stage for a more selective, earnings-driven market in 2026. He also shares insights on mid- and small-cap valuations, the rupee’s trajectory, prospects for export-oriented sectors, precious metals, bonds, and portfolio allocation strategies. Read the edited excerpts:
BT: How do you assess the performance of Indian equity markets in 2025 so far? What have been the key surprises or disappointments? Looking ahead, what macro or earnings variables will primarily drive markets in 2026?
Singhania: The Nifty 50 and BSE Sensex have achieved a year to date (YTD) return of 9.82% and 8.69%, respectively, marking steady progress in the wake of global uncertainties but the relatively small and uneven gains that Indian equities markets have delivered so far in 2025 fell short of the high expectations at the beginning of the year because of overvaluation, downgrades in earnings, and the tightening of liquidity conditions that indicate the whole market has clearly underperformed. The most obvious sign of underperformance has been the decline in the growth of corporate earnings to the single digits. The net margins in the banking sector contracted substantially in the wake of interest rate cuts, and the non-performing loans accelerated in the consumer and credit cards business. IT companies’ performance was poor on the back of declining US business and layoffs. The fall in the rupee has further diluted the profit margins in foreign currencies.
Factors are a benign monsoon supporting rural sentiment, consistent liquidity infusion by the RBI, strong macroeconomic fundamentals, with GDP growth above 7.5% and manageable inflation ranging around 2%, Domestic inflows offset FII exits, and simplification of the GST and policy stability post-election have been the major pluses. Macro economically, steady inflation and continued public spending were advantages, but a severe disappointment was the uneven growth in corporate earnings.
India's macro setup for 2026 is characterized by steady growth, disinflation, and accommodative policy, fostering an environment conducive to equity expansion. Healthy monsoons support rural consumption recovery. A US-India trade deal resolution could act as an export catalyst. In 2026, markets are expected to be driven by earnings recovery rather than valuation expansion, with key variables including corporate profit growth, interest rate direction, global liquidity, FII flows, crude oil prices, and currency stability. All things considered, 2025 has been a year of consolidation and time correction, laying the foundation for a more selective, earnings-driven market environment in 2026.
BT: Mid- and small-cap stocks have underperformed sharply this year. Do you expect this trend to persist, or are valuations now attractive? What triggers could lead to a sustained rebound in the broader market?
Singhania: Indian mid and small-caps have undoubtedly been quite weak in the current year 2025, with the Nifty Midcap 150 gaining only 4.75% YTD and the Nifty Smallcap 250 declining 7.57%, compared to the Nifty 50 gain of 9.82%. However, this run does not look sustainable into 2026, with the PEs having normalized to more reasonable levels Midcap 150 at 33x, Smallcap 250 at 28.5x , down from peaks above 40x and above 35x respectively. If the earnings of December and the March quarter start stabilizing and improving, the stocks, which were corrected 40-60% even when they had “stable fundamentals,” could well rally back. The valuation multiples of quality mid-cap stocks are normalized and moved towards historical averages due to the de-rating in 2025.
In the near future, the underperformance may persist, particularly if global liquidity remains tight and risk appetite is cautious. Still, the market's overall medium-term outlook continues to improve better. A number of factors are expected to result in a sustained rebound in mid- and small-caps. First, investor confidence would be rebuilt by a clear improvement of earnings growth, particularly in manufacturing, capital goods, infrastructure ancillaries, and consumption-linked sectors. Second, both domestic and international interest rate stability and easing would provide liquidity while encouraging risk-taking. Third, a strong catalyst might be an upsurge of FII flows, backed by relative value comfort and currency stability.
BT: The Indian rupee has weakened significantly, breaching the 90-per-dollar level. Where do you see the currency stabilising over the medium term, and which sectors or investment themes could benefit from a weaker rupee?
Singhania: The weakening of the Indian rupee and the breach of the Rs 90-per-dollar level, reflects both global and domestic factors rather than any single structural concern. The pressure on Indian rupee is being worsened by a strong US dollar driven by global interest rates, irregular risk-off sentiment, high crude oil prices and uneven capital flows. If there isn't a significant increase in oil prices or financial strain on the world economy, the rupee is expected to stabilize in a range of Rs 88–92 in the medium term. Even if short-term volatility continues, India's controllable current account deficit, foreign exchange reserves, steady inflation, and GDP growth should reduce the risk of depreciation.
A declining rupee creates opportunity for various sectors from an investment perspective. Export-oriented industries stand to gain the most, especially IT services, pharmaceuticals, specialty chemicals, textiles, and engineering goods. These industries support margin improvement as a substantial portion of their revenues are dollar-linked but their expenditure remains largely rupee-based. The companies to profit from currency depreciation are the ones with robust global order books and pricing power. However, industries that rely heavily on imports, like aviation, oil marketing firms, and several capital goods categories, may encounter pressure on their margins. Broadly, a declining rupee supports export-driven manufacturing and Make-in-India suppliers but investors should continue to be cautious when investing in import-heavy or indebted companies.
BT: Delays in the US–India trade agreement have impacted market sentiment. Do you expect progress in the near term? If delays continue, what could be the implications for Indian equities, particularly export-oriented sectors?
Singhania: The US and Indian trade negotiations are progressing steadily, and there is hope on both sides for reaching a trade agreement soon. In light of the noticeable progress on the negotiation side and the high political momentum on both sides, we see progressive breakthroughs in the near term ahead. As far as market dynamics are concerned, the US-India trade agreement impasse is more of a market sentiment issue than an outright market-stopping event, and even the timing counts in this regard. Progress on both sides, even if on various smaller aspects other than a broad trade agreement, is likely to trigger positive market reactions, as mere transparency itself is an antidote for risk premia.
Nonetheless, should delays carry on, Indian equities, particularly those with an export focus such as IT services, textiles, and pharmaceuticals, could face the challenge of short-term headwinds related to uncertainties in tariffs and market access.
BT: Gold and silver have emerged as top-performing asset classes in 2025. What factors have driven this rally, and do you expect the trend to continue? How should investors approach precious metals from a portfolio allocation perspective?
Singhania: The precious metals market has been performing exceptionally well in 2025. Gold and silver prices have moved dramatically upwards. The prices of gold and silver in 2025 can be termed as nothing but spectacular. Gold prices are up over 60% in 2025, while silver prices are up a staggering 120%. The rise in gold prices in 2025 can be termed as a non-speculative movement. The current rise in the prices of gold can be attributed to various reasons. These include international tensions as well as aggressive buying of gold from central banks across the globe. The aim of buying is to strengthen their reserves.
Faithful to its nature, gold has once more hogged the limelight as a haven asset, attracting investors during periods of uncertainty and economic stress. Central banks all over the world being the largest source of demand for gold are likely to continue the strategic reserves buying which may offer consistent demand in the coming period. Silver, however, is an essential metal in today's world which finds extensive application in electronics, solar panels, batteries, and semiconductors. With technology evolving and the need for electronics, green energy infrastructure, and semiconductors rising, the silver price up move is likely to remain strong.
For Investors who are looking to get exposure to the above two classes, a well-balanced strategy is a must which involves gold for safety and silver for potential growth. This diversification helps not only mitigating the risk but also enhances the return of the portfolio. For those investors who wish to get exposure to these metals, taking a staggered investment route through gold/silver ETFs or mutual funds will be an efficient means of dealing with volatility and possible corrections following such a dramatic rally while still capturing long-term trends. Investors should treat precious metals as a strategic hedge—allocating 5–10% of portfolios to gold for stability and a smaller tactical allocation to silver for growth-oriented.
BT: What is your outlook on the bond market in a falling interest-rate environment? Should investors increase exposure to fixed income, and what proportion of a portfolio would you recommend allocating to bonds?
Singhania: In a falling interest-rate scenario, the bias remains positively structured; however, equity-oriented investors tend to overlook this fact. In a falling interest-rate scenario, the bias remains positively structured. Historically speaking, the most favorable period for bonds emerges when rate reductions are about to happen or occur in the initial stages of the interest-rate reduction process when yields initially start to soften but are still relatively high. This period offers investors benefits in the form of stable coupons as well as appreciation in prices due to rising prices. Generally, longer sovereign and investment-grade bonds will be most positively influenced when interest rates start to soften. Bonds act as a stabilizing agent in equity markets when markets are in a late-cycle or risk-off phase.
The bond market overall has an optimistic outlook for accrual-based returns and diversification strategies. However, the phenomenal performance experienced in 2025 will not be easily replicable. There shall be a return to mid-single-digit performance in terms of returns on investment. In terms of allocation, conservative investors may think about 40% or more, depending on age, income stability, and return expectations, while moderate risk investors could consider a 20-25% exposure to fixed income.