'Calibrated reallocation,' not a 'switch' from gold: Ashika Global's Amit Jain; names 2 top blue chips

Amit Jain, Co-Founder of Ashika Global Family Office, in an emailed interaction with Business Today on Tuesday, clarified that the current market setup calls for a "calibrated reallocation" rather than a complete switch out of gold.

While gold remains a key hedge against uncertainty, Jain believes incremental capital should now move toward Indian large-cap equities, where valuations and earnings visibility are improving.

He also identified two blue-chip stocks that stand out as timely opportunities in the ongoing rotation from defensive to growth assets.

Here are the edited excerpts from the interview:

1. Given gold's strong rally in 2025 and its role as a hedge, what key signals suggest that its role is now shifting from growth driver to defensive asset?

Amit Jain: Gold's rally in 2025 reflects peak risk aversion rather than sustainable growth. Historically, such sharp surges coincide with extreme macro stress, for instance, rising US debt, a weakening dollar and safe-haven demand. But with inflation easing and rate-cut expectations stabilising, the probability of further upside is narrowing.

Central bank buying, which fuelled the rally, has also begun to plateau as reserve thresholds are met. Meanwhile, real yields are firming and equity risk premiums are turning attractive again. These shifts indicate that gold's role is transitioning back to its traditional purpose - capital preservation during volatility: rather than a driver of portfolio growth.

For investors, this signals time to rebalance toward productive assets, like large-cap equities, where earnings visibility and valuation comfort are improving.

2. What fundamentals in Indian large-cap stocks (economic growth, corporate earnings, valuations) support the argument that this might be a timely rotation into equities?

AJ: India's large-cap fundamentals are aligning for a favourable equity rotation. The economy is projected to grow around 7 per cent in FY26, among the fastest globally, supported by resilient domestic demand, infrastructure spending and stable policy continuity. Corporate earnings are expected to expand by 14–15 per cent, driven by strong performance in IT, FMCG and selective PSU sectors.

Valuations are reasonable relative to growth prospects. The Nifty trades near 19.5x FY26 earnings, below its long-term average, while select blue chips like TCS and ITC offer compelling entry points with robust balance sheets and consistent cash flows. The earnings yield gap versus 10-year G-Sec yields, currently about 200 basis points (bps), historically signals a favourable setup for equities.

In short, India's macro stability, improving corporate profitability and moderate valuations make large caps a timely, data-backed opportunity for investors rotating from defensive to growth assets.

3. How should investors think about the term 'switch' — is this a full exit from gold, a partial re-allocation or an overlay in a diversified portfolio?

AJ: Investors should view the 'switch' not as a full exit from gold but as a calibrated reallocation within a diversified portfolio. Gold continues to serve as an essential hedge against geopolitical risk and currency volatility, so maintaining an 8–10 per cent allocation remains prudent.

The shift primarily applies to incremental capital or tactical redeployment of profits from gold's recent rally toward large-cap equities, where valuations and earnings visibility are attractive. This balanced approach allows investors to capture potential equity upside while preserving the portfolio's defensive cushion. In essence, it's not about abandoning safety ... it's about repositioning for growth with discipline.

4. What asset allocation strategy makes sense in the current market?

AJ: As mentioned earlier, a balanced allocation strategy now would involve maintaining around 8–10 per cent exposure to gold as portfolio insurance while channeling new capital toward large-cap equities. Gold has already delivered strong returns this year and should continue to play its role as a hedge against macro uncertainty.

The incremental focus, however, should shift to Indian large caps where valuations are reasonable and earnings visibility is strong. Allocating 55–60 per cent to equities - tilted toward high-quality large caps in IT, banking and manufacturing offers a good blend of stability and growth. The rest can stay in debt or liquid assets for flexibility. This mix preserves downside protection while positioning investors to participate in the next leg of equity market leadership.

5. What factors should investors monitor?

AJ: IT companies are poised for recovery as global tech spending stabilises and margins begin to improve. FMCG majors are benefiting from steady rural demand recovery and easing input costs, which should support earnings growth. Select PSUs, particularly in defense, capital goods and energy, continue to gain investor attention due to improving balance sheets, policy support, and higher dividend payouts.

Investors should monitor factors, such as margin recovery in IT, rural demand trends for FMCG and government capex momentum for PSUs, all of which will determine the strength and sustainability of this rally.

6. From a risk-management perspective, what are the potential pitfalls of moving too early into equities — and how should investors mitigate them?

AJ: The main risk of moving too early into equities lies in short-term volatility and potential earnings downgrades if global growth slows or geopolitical risks escalate. Valuations in some segments are still elevated, and any delay in rate cuts or spike in crude prices could trigger corrections.

Investors can mitigate these risks by staggering their equity entry through SIPs or phased allocations rather than lump-sum exposure. Focusing on large caps with strong balance sheets, stable cash flows and sectoral leadership provides downside protection. Maintaining 8–10 per cent allocation in gold and sufficient liquidity reserves can also act as a cushion against sudden market shocks.

7. For an investor who has held gold as a defensive anchor in turbulent times, how should they approach timing, triggers and execution if they're considering the shift now?

AJ: Investors who've held gold as a defensive anchor should treat this shift as a gradual, data-driven rotation rather than a sudden pivot. The right timing depends on clear triggers, signs of stability in global growth, firming corporate earnings in India and moderating geopolitical risks. Execution should be phased over multiple tranches to average entry levels and reduce timing risk.

A practical approach is to start reallocating 20–30 per cent of gold profits into large-cap equities with strong fundamentals in IT, FMCG and selective PSUs. This way, investors preserve core defensive exposure while positioning for the next growth cycle in equities.

8. Looking ahead, what would be the key triggers — macro or micro, which could signal whether the rotation from gold to large-caps is getting validated or needs reassessment?

AJ: Key triggers to watch will include both macro and micro signals. On the macro side, watch for stability in global inflation, clarity on US rate cuts and consistent domestic GDP growth above 6.5 per cent. These would confirm confidence returning to risk assets. On the micro side, steady corporate earnings growth in large-caps, improving credit demand and sustained FII inflows into Indian equities would validate the rotation. Conversely, renewed global volatility or a spike in inflation would warrant reassessing the pace of the shift.