2026 Market Outlook: Risks, Liquidity And The Possible Trump Card

Looking ahead to 2026, Jyotivardhan Jaipuria believes investors must balance optimism with realism. On the risk side, rising interest rates in Japan could reduce global liquidity, while the US faces the challenge of sticky inflation amid slowing growth. Another key concern is the possibility of an AI-led market correction, which could have global repercussions. However, there are positives too. If the US Federal Reserve accelerates balance sheet easing, liquidity could once again flow into asset markets, supporting valuations. The base-case expectation is a better market in 2026 compared to 2025, though not an extraordinary one. Large caps may deliver steady returns, while mid- and small-caps could outperform—provided global macro conditions remain supportive.