Put up Views:
8
At Truemind Capital, our broad understanding has been:
- Fairness markets are anticipated to ship muted returns owing to dear valuations
- Quick length debt funds will carry out higher on a risk-adjusted foundation within the debt class
- Gold could possibly be a very good portfolio hedge
Positioning our shopper portfolios primarily based on these expectations allowed us to yield constructive returns, which neither benchmark indices nor longer-term debt funds may.
Fairness Market Insights:
Indian fairness markets remained directionless throughout the October–December 2025 quarter. After a protracted correction by means of a lot of the yr, benchmark indices noticed intermittent recoveries however failed to determine a sustained uptrend. Over the quarter, markets largely moved inside a slim vary, reflecting consolidation fairly than a transparent directional pattern. Whereas indices ended 2025 in constructive territory, Indian equities continued to underperform a number of world friends over the trailing one-year interval.
On December 31, the BSE Sensex rose 545.5 factors to shut at 85,220.6, ending the yr on a agency word, rising 9% y-o-y. Nonetheless, this year-end rally did little to change the broader image. Market participation remained slim, with mid- and small-cap shares persevering with to face strain after robust multi-year beneficial properties. This was evident within the uneven efficiency throughout the broader market, the place returns have been pushed by choose pockets fairly than broad-based participation.
Globally, development has remained resilient, however indicators of moderation have gotten extra seen throughout main economies. Whereas recession dangers seem contained for now, markets are more and more getting into a late-cycle part, the place returns are prone to be uneven and selective. Fairness efficiency continued to learn from ample liquidity and expectations of charge cuts, at the same time as geopolitical dangers, commerce negotiations and coverage uncertainty remained elevated. Towards the top of 2025, sentiment in US equities softened, with the S&P 500 ending December largely flat after a unstable month, reflecting extra cautious investor positioning.
Wanting forward, company earnings development has moderated meaningfully. After the unusually robust FY23-FY24 interval, revenue development has cooled to excessive single digits, with income development additionally remaining modest. Ahead expectations level to a extra measured development setting, suggesting that the distinctive, liquidity-driven returns of the earlier cycle are unlikely to repeat within the close to time period.
Though valuations in Indian equities have corrected from earlier peaks, they continue to be above long-term averages, notably in mid and small caps, limiting upside regardless of an bettering macro backdrop.
One essential theme to observe globally is the sharp rise in AI-led investments, notably in markets just like the US & South Korea, which have pushed a big share of latest capital spending and supported near-term development. Nonetheless, the sturdiness of AI demand and the tempo at which these investments translate into sustainable money flows and investor returns stay unsure.
As well as, ongoing geopolitical developments, together with commerce coverage uncertainty, elevated fiscal deficits throughout a number of developed and rising economies, and rising geopolitical tensions, proceed so as to add to world threat. In such an setting, robust macro knowledge alone could not translate into broad market beneficial properties, reinforcing the significance of self-discipline and selectivity in fairness investing.
What we’re doing?
In opposition to this backdrop, we stay measured in fairness publicity. Portfolios are tilted in direction of large-cap and value-oriented methods, complemented by selective world publicity primarily in China equities for diversification, whereas avoiding aggressive thematic and momentum-driven allocations. We count on fairness returns over the medium time period to be extra modest and earnings-driven, making disciplined portfolio building extra essential than chasing fashionable tendencies.
Debt Market Insights:
Debt markets remained energetic throughout the October–December 2025 quarter, with flows largely influenced by liquidity situations and seasonal elements fairly than any deterioration in credit score high quality. The short-term yields in India confirmed a light upward drift by means of This autumn 2025 regardless of the repo charge reduce by the RBI. This occurred primarily as a result of a tightening banking system liquidity from strong credit score development outpacing deposits.
The Reserve Financial institution of India reduce the repo charge by 25 foundation factors in early December, taking it to five.25%, as inflation remained benign and development issues endured. On the identical time, the RBI continued to actively handle liquidity by means of open market operations and foreign exchange swaps to make sure clean transmission of coverage easing.
Nonetheless, bond markets confronted strain from elevated provide, notably higher-than-expected state authorities borrowings. Because of this, long-term yields moved greater throughout the month, with the 10-year authorities bond yield briefly touching multi-month highs earlier than settling close to the 6.6% stage by the top of December. This strengthened the sensitivity of long-duration bonds to produce dynamics, even in an easing charge setting.
Globally, liquidity situations additionally turned extra accommodative. Within the US, the Federal Reserve introduced renewed purchases of Treasury payments to rebuild reserves within the monetary system, successfully injecting liquidity at the same time as coverage charges stay elevated. This return of balance-sheet help exhibits the continued reliance of world markets on central financial institution liquidity, notably amid excessive fiscal deficits and late-cycle financial situations.
Our Strategy to Debt Allocation
At Truemind, we proceed to view debt as a stabilising part of portfolios fairly than a supply of return maximisation. Whereas rates of interest have begun to maneuver decrease, the expertise of the previous yr reinforces our desire for shorter-duration methods, which have delivered extra constant risk-adjusted outcomes in comparison with long-duration funds.
With long-term yields remaining delicate to produce dynamics and world developments, we consider the risk-reward trade-off for extending length stays unfavourable at this stage. Accordingly, our focus stays on short-duration and high-quality accrual methods that provide stability and liquidity.
From a post-tax perspective, arbitrage funds stay a related possibility for buyers in greater tax brackets, providing debt-like returns with comparatively environment friendly taxation.
Going ahead, whereas debt fund flows are anticipated to normalise as tax-related pressures ease, the trajectory of bond yields will proceed to be influenced by inflation tendencies, authorities borrowing, and financial coverage actions – each domestically and globally. On this setting, sustaining a disciplined, risk-aware method to debt allocation stays essential.
Different Asset Courses:
Gold remained one of many strongest-performing asset courses all through 2025, extending its beneficial properties into the latest quarter. The rally was supported by elevated world uncertainty, sustained central financial institution shopping for, and expectations of decrease actual rates of interest globally. Furthermore, foreign money weak point in a number of markets additional strengthened gold’s position as a portfolio hedge. In keeping with our long-held view, gold has as soon as once more demonstrated its worth as a strategic diversifier fairly than a buying and selling asset.
The true property sector, alternatively, witnessed its weakest quarter since Q3 2021 when it comes to gross sales quantity, regardless of the festive season that normally drives demand. This may be attributed to a market shift in direction of premiumisation, the place the whole worth of gross sales elevated even because the variety of models bought fell. Greater costs and tighter affordability have slowed transaction volumes regardless of regular demand in choose segments. Given its inherent illiquidity, lengthy holding durations, and cyclical nature, actual property shouldn’t be the dominant part of 1’s total wealth technique.
Truemind’s Mannequin Portfolio – Present Asset Allocation
Private Finance Capsule:
Watch out for Costly Debt Investments
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