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At Truemind Capital, our broad understanding has been:
- Fairness markets will underperform owing to dear valuations
- Quick-duration debt funds will carry out higher
- Gold might be a superb portfolio hedge
Positioning our shopper portfolios based mostly on these expectations allowed us to yield constructive returns, which neither benchmark indices nor longer-term debt funds may.
Fairness Market Insights:
Fairness markets have remained unstable over the previous 12 months, marked by corrections and short-lived recoveries. After a pointy five-month correction from October 2024 to February 2025, markets slowly recovered, solely to see one other spherical of volatility. For the quarter ending September 2025, the BSE Sensex slipped round 4% and is down about 5% over the previous 12 months, with mid and small-cap indices seeing steeper declines.
Globally, US equities remained buoyant with the S&P 500 touching lifetime highs, supported by continued power from mega-cap shares.
What’s notable this time is India’s relative underperformance versus world friends. It’s uncommon to see India as the one main market delivering adverse returns over the past 12 months, whereas most developed and rising markets stayed constructive. India’s valuation premium to world equities, at 9%, is now beneath its 10-year common of 15%, reflecting sturdy international outflows and lowered index weights by the 12 months.
Now, do these decrease costs imply Indian equities are attractively valued? Not fairly but. Valuations have eased from elevated ranges, however they’re nonetheless not low cost. And whereas there are inexperienced shoots seen within the type of better-than-expected GDP print for Q1 FY26, benign inflation, sturdy assist from home institutional buyers and supporting authorities insurance policies, what’s going to really drive markets is company earnings progress.
Nifty 500’s combination quarterly PAT progress%, which touched 50% plus at the beginning of FY24, declined sharply to -1% in the course of FY25. Extra lately, company revenue progress has begun to recuperate, registering quarterly will increase within the vary of 8-10%. Going ahead, we anticipate progress to be at subdued ranges. If earnings degree has moderated versus the earlier peak part, it’s necessary for buyers to maintain expectations realistic- the extraordinary market returns of the previous few years are unlikely to repeat within the coming years.
Within the close to time period, two key components will form the outlook: (a) a revival in consumption, and (b) progress on the India–U.S. commerce settlement. Regardless of three main coverage strikes this year- earnings tax cuts within the Union Funds, RBI price cuts, and GST price reductions, markets haven’t but turned decisively constructive. The upcoming festive quarter will subsequently be essential in testing whether or not these measures translate into increased shopper demand. On the exterior entrance, ongoing tariff-related discussions have continued so as to add noise, so a commerce decision could be a significant reduction.
At current, given the heightened world uncertainties and stretched valuations, it’s prudent to not be overexposed to equities (consult with our urged asset allocation). Inside equities, we proceed to want large-cap, value-oriented portfolios over aggressive progress themes and mid & small-cap schemes. This method has served our purchasers effectively, delivering superior outcomes, particularly over the last one 12 months when benchmark indices gave adverse returns.
We additionally keep a selective publicity to China, particularly within the know-how sector, on the again of continued world dominance, enticing valuations and diversification functions.
Debt Market Insights:
With the RBI kick-starting the rate-easing cycle earlier this 12 months, yields have softened throughout most fixed-income merchandise. Usually, when rates of interest transfer decrease, long-duration bonds are likely to outperform. Nonetheless, we’ve consciously prevented taking publicity to such funds, as we assessed that shorter-duration methods will supply higher risk-adjusted returns.
Keep in mind, the first function of debt in your portfolio is to convey stability and never add unwarranted volatility. The truth is, throughout CYTD 2025, long-duration funds haven’t solely been extra unstable however have additionally delivered weaker returns in comparison with shorter-duration counterparts.
Regardless of important price cuts that ought to have lifted bond costs, long-term bonds have confronted promoting stress. The ten-year authorities bond yield has remained range-bound close to 6.5%, suggesting restricted upside from extending period. With long-end yields unlikely to fall sharply, we proceed to want shorter maturities.
In its October 2025 coverage, the RBI saved the repo price unchanged at 5.5%, sustaining a impartial stance to steadiness progress and monetary stability. Though inflation has cooled to round 2.6%, the central financial institution appears to be in a wait-and-watch mode earlier than slicing charges additional implying that yield volatility could persist within the medium time period.
In the meantime, the quick finish of the yield curve stays steady and well-supported by strong demand for CDs and CPs, together with improved liquidity circumstances following the CRR unwind and upcoming authorities spending.
From a post-tax perspective, arbitrage funds proceed to be a horny choice for buyers in increased tax brackets. These funds ship debt-like returns with a diffusion over repo charges and revel in favorable taxation. Relying on short-term liquidity wants, combining arbitrage funds with ultrashort-term debt funds helps improve each stability and adaptability inside portfolios.
Different Asset Courses:
Gold has been the standout performer of 2025 thus far, delivering the best month-on-month returns amongst main asset lessons. Gold BeES gained almost 20% within the Sep’25 quarter and a powerful 51% over the previous 12 months, fuelled by a mixture of world macroeconomic uncertainty, central financial institution shopping for, and expectations of decrease rates of interest worldwide.
As we’ve constantly emphasised, conserving a strategic 10–20% allocation to gold provides significant resilience to portfolios, particularly throughout occasions of worldwide volatility. The current rally has as soon as once more strengthened the significance of gold as a long-term diversifier reasonably than a buying and selling asset.
However, India’s actual property market has proven indicators of cooling. Prime residential gross sales are falling largely on account of rising costs and affordability challenges. New challenge launches additionally slowed as world uncertainty dampened sentiment. Builders, nevertheless, proceed to search out regular demand within the premium housing phase, which stays comparatively insulated.
That mentioned, valuations throughout most actual property markets have turned costly. We’re advising purchasers to keep away from recent property purchases for now and keep a disciplined allocation of not more than 20–25% of the overall portfolio to actual property. Given its inherent illiquidity, lengthy holding intervals, and cyclical nature, actual property needs to be seen as a complementary and never dominant part of 1’s general wealth technique.
Truemind’s Mannequin Portfolio – Present Asset Allocation
Private Finance Capsule:
Purchase and maintain doesn’t guarantee outperformance
Do you have to nonetheless spend money on Gold at present costs?
