Gold, silver gain edge as equity momentum weakens; is the worst over for markets?
Precious metals significantly outperformed Indian equities, reinforcing their role as portfolio stabilisers during periods of equity consolidation. Gold and silver benefited from sustained central bank buying, currency volatility and persistent geopolitical uncertainty.
- Jan 23, 2026,
- Updated Jan 23, 2026 1:21 PM IST
Indian equity markets are passing through a phase of consolidation marked by global uncertainty, uneven participation and cautious investor positioning, according to PL Asset Management. In its latest report, PMS Strategy Updates and Insights, the firm noted that while India’s structural macroeconomic fundamentals remain strong, near-term equity returns have been constrained by external headwinds and narrow market leadership.
Why markets struggled
The report highlights that market breadth has stayed persistently weak over the past year, with headline indices being supported by a small set of large-cap stocks. A majority of stocks have struggled to sustain levels above their long-term moving averages, underscoring the fragility beneath index-level resilience. This divergence suggests that although Indian equities remain fundamentally sound, the market has yet to transition into a durable, broad-based uptrend.
The consolidation phase has also been reflected in the performance of equity style factors. In 2025, Value and High Beta strategies generated positive returns, while momentum underperformed. According to PL Asset Management, this pattern points to a market driven by selectivity rather than sustained trends. Value stocks attracted investor interest due to attractive valuations and relatively stable earnings visibility, making them a preferred refuge amid heightened volatility. High Beta strategies delivered modest gains, signalling calibrated risk-taking rather than a full-fledged risk-on environment.
In contrast, momentum-based strategies struggled as repeated trend reversals and fragmented leadership limited their effectiveness. Overall, investor behaviour during the year remained cautious, with capital gravitating toward stocks offering valuation comfort and controlled risk. The style factor landscape was defined by sharp divergences, reinforcing a low-risk, selective investment environment shaped by sector- and stock-specific movements.
Metals topped charts
Against this backdrop, precious metals significantly outperformed Indian equities, reinforcing their role as portfolio stabilisers during periods of equity consolidation. Gold and silver benefited from sustained central bank buying, currency volatility and persistent geopolitical uncertainty. Silver also drew support from its dual role as a precious and industrial metal, particularly amid constrained global supply conditions.
PL Asset Management’s analysis shows that Indian equities are currently trading near multi-cycle relative lows when compared with gold and silver. Historically, such divergences between financial and real assets have coincided with phases where diversification beyond pure equity exposure helped investors preserve capital and manage volatility more efficiently. The firm emphasised that this trend does not indicate a structural shift away from equities, but rather the importance of balance during transitional market cycles.
What lies ahead
Market sentiment indicators, however, suggest that the worst of pessimism may be behind. Internal sentiment and risk metrics point to a gradual improvement from recent troughs, supported by resilient domestic macro data and a steadily improving earnings outlook. The high–low beta spread turning positive toward the latter part of 2025 indicates early signs of returning risk appetite, though PL Asset Management expects the recovery to be measured rather than linear.
“Markets are currently in a phase where outcomes are being driven more by asset allocation than by broad-based equity rallies,” said Siddharth Vora, Head – Quant Investment Strategies and Fund Manager at PL Asset Management. “While India’s long-term growth fundamentals remain intact, near-term volatility is inevitable. Gold and silver have once again demonstrated their relevance as portfolio stabilisers, helping investors manage risk and stay invested through periods of market consolidation.”
Looking ahead, the firm expects Indian equities to benefit from a gradual recovery in domestic earnings and potential global capital rotation as valuations in AI-led global markets normalise. Until market breadth improves meaningfully and volatility moderates, PL Asset Management believes diversified asset allocation — combining equities with precious metals — will remain critical to navigating the current market cycle effectively.
Indian equity markets are passing through a phase of consolidation marked by global uncertainty, uneven participation and cautious investor positioning, according to PL Asset Management. In its latest report, PMS Strategy Updates and Insights, the firm noted that while India’s structural macroeconomic fundamentals remain strong, near-term equity returns have been constrained by external headwinds and narrow market leadership.
Why markets struggled
The report highlights that market breadth has stayed persistently weak over the past year, with headline indices being supported by a small set of large-cap stocks. A majority of stocks have struggled to sustain levels above their long-term moving averages, underscoring the fragility beneath index-level resilience. This divergence suggests that although Indian equities remain fundamentally sound, the market has yet to transition into a durable, broad-based uptrend.
The consolidation phase has also been reflected in the performance of equity style factors. In 2025, Value and High Beta strategies generated positive returns, while momentum underperformed. According to PL Asset Management, this pattern points to a market driven by selectivity rather than sustained trends. Value stocks attracted investor interest due to attractive valuations and relatively stable earnings visibility, making them a preferred refuge amid heightened volatility. High Beta strategies delivered modest gains, signalling calibrated risk-taking rather than a full-fledged risk-on environment.
In contrast, momentum-based strategies struggled as repeated trend reversals and fragmented leadership limited their effectiveness. Overall, investor behaviour during the year remained cautious, with capital gravitating toward stocks offering valuation comfort and controlled risk. The style factor landscape was defined by sharp divergences, reinforcing a low-risk, selective investment environment shaped by sector- and stock-specific movements.
Metals topped charts
Against this backdrop, precious metals significantly outperformed Indian equities, reinforcing their role as portfolio stabilisers during periods of equity consolidation. Gold and silver benefited from sustained central bank buying, currency volatility and persistent geopolitical uncertainty. Silver also drew support from its dual role as a precious and industrial metal, particularly amid constrained global supply conditions.
PL Asset Management’s analysis shows that Indian equities are currently trading near multi-cycle relative lows when compared with gold and silver. Historically, such divergences between financial and real assets have coincided with phases where diversification beyond pure equity exposure helped investors preserve capital and manage volatility more efficiently. The firm emphasised that this trend does not indicate a structural shift away from equities, but rather the importance of balance during transitional market cycles.
What lies ahead
Market sentiment indicators, however, suggest that the worst of pessimism may be behind. Internal sentiment and risk metrics point to a gradual improvement from recent troughs, supported by resilient domestic macro data and a steadily improving earnings outlook. The high–low beta spread turning positive toward the latter part of 2025 indicates early signs of returning risk appetite, though PL Asset Management expects the recovery to be measured rather than linear.
“Markets are currently in a phase where outcomes are being driven more by asset allocation than by broad-based equity rallies,” said Siddharth Vora, Head – Quant Investment Strategies and Fund Manager at PL Asset Management. “While India’s long-term growth fundamentals remain intact, near-term volatility is inevitable. Gold and silver have once again demonstrated their relevance as portfolio stabilisers, helping investors manage risk and stay invested through periods of market consolidation.”
Looking ahead, the firm expects Indian equities to benefit from a gradual recovery in domestic earnings and potential global capital rotation as valuations in AI-led global markets normalise. Until market breadth improves meaningfully and volatility moderates, PL Asset Management believes diversified asset allocation — combining equities with precious metals — will remain critical to navigating the current market cycle effectively.