Gold, IT or MFs: where should investors put their money now? 360 ONE’s Mayur Patel decodes the outlook

After a prolonged phase of consolidation, the Indian market may be entering a more favourable phase for investors, with valuations becoming more reasonable after a prolonged correction. But the bigger question is where the next leg of returns could come from. While gold and silver have rallied sharply, concerns over stretched valuations in parts of the market and AI-led disruption in IT have made stock selection increasingly important. In an interview with BT, Mayur Patel, President & Fund Manager – Listed Equity at 360 ONE Asset, discusses where investors should look for opportunities over the next 12–18 months. He also explains why investors should be cautious on some sectors, what could drive the Nifty over the next 12 months, and whether gold, fixed income, and multi-asset funds deserve a bigger place in portfolios. Edited excerpts:

Q). Gold and silver have delivered strong returns. Should investors continue to hold or add to precious metals, or there is the risk of buying after a sharp rally increasing?

Mayur Patel: Both metals are down from their peaks, and volatility may persist in the near term. Rather than timing a near-term trade, investors may approach gold and silver from a long-term perspective. Gold’s long-term thesis is supported by structural central bank buying (People’s Bank of China purchasing gold for 21 consecutive months). Separately, there is a gradual shift away from single-currency reserve concentration, strengthening gold’s role as a strategic reserve asset. Silver adds an industrial dimension, with over half its demand coming from solar and electronics, while supply remains relatively inelastic. Together, these factors support a multi-year diversification case rather than a momentum trade.

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Q). The IT sector has seen a sharp decline amid concerns over global growth and AI disruption. Do you see this as a buying opportunity, and what could trigger a recovery in IT stocks?

Patel: Despite the recent correction, we continue to remain underweight on Indian IT services, especially large-cap companies. The risk of AI-led disruption is real, and large-cap players could face 3–4% deflation, as a significant part of their business is vulnerable to this disruption. These companies need to transform themselves with urgency by acquiring niche capabilities and building new AI-related skills. Until that transition becomes visible, we remain underweight on large-cap IT despite reasonable valuations.

An upside risk to our current stance would be an earlier than expected transformation by these companies, including the acquisition and development of relevant AI capabilities.

Q). Which sectors or investment themes currently offer the best combination of reasonable valuations and earnings growth? Which sectors should investors be cautious about?

Patel: We are positive on financials, industrials, consumer discretionary, and telecom. Private banks offer reasonable valuations, with system credit growth rebounding from around 9% to 16–17%. While margin pressures may linger a bit longer than anticipated, the risk-reward remains favourable. NBFCs are likely to benefit from the commercial vehicle cycle, improving consumption, and broader economic resilience.

Industrials offer 3–5-year growth potential across renewable energy equipment, power T&D, electronics, defence and data centres, though elevated valuations warrant selectivity. Consumer discretionary should see a cyclical uptrend over the next few years. Overall, we see substantial opportunities in these areas, while we remain underweight on IT, energy and utilities.

Q). Given current valuations and market uncertainties, where should investors look for better opportunities over the next 12–18 months, equities, fixed income, gold or cash?

Patel: It is not about choosing one asset class over another. Each has a different risk-return profile and role in a portfolio.

I am quite bullish on Indian equities. The Nifty is trading at around 3x price-to-book, below its 20-year median, making valuations reasonable. FCNR(B) led liquidity could be a near-term catalyst. As the West Asia conflict ends, crude could settle around $70, while improving consumer discretionary demand, the commercial vehicle cycle and private capex could drive a strong earnings cycle.

In fixed income, we prefer quality accrual in short to medium maturities, with policy rates likely to remain on pause before a modest hike next year. Gold may be useful from a long-term perspective. Ultimately, allocation across equities, fixed income and gold should reflect an individual’s risk profile.

Q). The Nifty 50 has delivered largely flat returns over the past two years. What can investors expect from the index over the next 12 months?

Patel: We focus on risk-reward rather than predicting market returns. At this point, the market’s 3x price-to-book valuation, below its 20-year median, suggests valuations are relatively more reasonable than in recent history. The rate cycle is benign, underlying growth trends remain resilient, liquidity is improving and credit growth has rebounded.

Crude oil prices are the key near-term concern, but they should normalise as the West Asia conflict ends. Without assuming any valuation rerating, double-digit compounding in line with earnings growth is a reasonable expectation over the next few years.

Q). With market valuations varying widely across large, mid and small caps, how should mutual fund investors choose between different equity fund categories today?

Patel: Following a meaningful correction, small-cap valuations appear more reasonable, with growth trends holding up. Mid caps are somewhat expensive relative to their own history. Large caps offer value, but growth concerns persist across several companies. That is our current pecking order from a risk-reward perspective.

However, investors should allocate across these categories based on their risk appetite. The flexi cap category may appeal to investors who prefer to leave the allocation across large, mid and small caps to the fund manager, allowing the portfolio to dynamically shift across market-cap segments as opportunities evolve. Fund selection should follow the investor's own suitability assessment or speaking to an advisor.

Q). With many investors entering mutual funds after strong market returns, what mistakes should investors avoid, and should they continue with SIPs during periods of high volatility?

Patel: Investors often chase past returns. In September 2024, when the Nifty was near its peak at around 4.2x price-to-book (3.2x is the 20-year median), investor participation in equities remained elevated. Today, after nearly two years of time and price correction, the Nifty trades closer to 3x price-to-book. The risk-reward has reversed and become quite reasonable, yet investor enthusiasm is lower. A common mistake is increasing allocations sharply during strong market phases and turning overly cautious after corrections.

SIPs work by averaging the purchase cost across market ups and downs, so continuing through volatility aligns with how the mechanism is meant to function. Investors should stay disciplined on asset allocation, periodically rebalance and avoid chasing recent outperformers purely on momentum.

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Q). How could the rupee, interest rates and geopolitical developments impact Indian equity markets over the next year?

Patel: The rupee has stabilised and FPIs have turned net buyers over the past two months, both positive signals for equity flows. RBI measures such as the discounted swap window for FCNR(B) deposits should support the capital account and the rupee, setting up a virtuous cycle for FPI flows and equity markets. The RBI is likely to hold rates in the near term, as inflation, though rising, is not yet broad-based, keeping the macro backdrop supportive of earnings. As the West Asia conflict eases, crude could correct towards USD 70/bbl, cushioning the CAD and improving macro fundamentals. This could attract further FPI flows, support the rupee and reinforce the virtuous cycle.

Q). Multi-asset funds are seeing a sharp rise in investor interest. What is driving this trend, and can it sustain as market conditions change?

Patel: Multi-asset allocation fund inflows crossed ₹100 billion a month by January 2026. Two forces are at work. Structurally, these funds combine equity, debt and gold or silver in one mandate, subject to meeting certain limits. Cyclically, the surge tracked the gold-silver rally into January 2026 and has since moderated as metals corrected. Still, it's a genuinely useful product. Equities and precious metals may show inverse correlation in volatile periods like Covid, exactly when diversification matters. Structurally, we expect allocation to shift gradually from pure fixed income toward such mixed-asset products.