Speaking to Kshitij Anand of ETMarkets, Dhiren Shah, smallcase manager and Co-Founder of Kamayakya, shares his outlook on gold and silver in 2026, highlighting why a repeat of last year’s outsized rally looks unlikely.
Shah explains how global geopolitics, US Federal Reserve actions, and central bank policies will remain the key triggers shaping precious metal prices, even as broader markets shift focus toward earnings, valuations, and stock-specific opportunities. Edited Excerpts –
Q) Thanks for taking the time out. We have hit fresh record highs in November, with a 10% gain so far this year. How are we placed for 2026?
A) Earnings outlook for the frontline index is estimated to be in mid-teens next year with a good macro-economic background with reducing trend of fiscal deficit and improvement in trade deficit due to falling crude oil prices. Current valuations are close to long-term averages.
Excesses have started correcting themselves. GST and Income tax reforms will play out in FY27. Capex pickup, Tariff trade deal and rupee depreciation are key monitorables.It will be necessary to have a stock specific approach going forward, as there are pockets of value with growth triggers.
Q) Gold and silver outperformed by a wide margin in 2025. How will precious metals play out in 2026? Any triggers to watch out for?
A) Gold and Silver have performed extremely well over the last 18 months, they are unlikely to give such exponential move next year.
However much of their returns next year will depend on global geopolitical situation, US Fed policy actions, global central actions in gold and silver markets.
Q) Rupee hit a fresh low against the USD surpassing the 90 mark. Are we on our way to breach the 100 mark against the USD. What is causing the fall?
A) 2025 has seen sizeable FII outflows from Indian equities and debt with rising US yields and better opportunities in US assets. This has led to FII pulling capital out from Emerging markets, including India.
Rupee may fall to mid 90s but crossing 100 against USD will be more gradual over few years compared to the current steep fall in INR against USD that we see currently.
Q) Which sectors are likely to hog the limelight in 2026? Sectors that are likely to lead a rally.
A) Discretionary consumption will perform well with increasing liquidity in the hands of consumers from Direct and Indirect tax sops provided by the government.
Manufacturing and infrastructure Industry should continue to do well due to government incentives, PLI schemes and Make in India drive. Chemicals and other export related sectors should see an improvement due to weak rupee.
Q) Any themes or sectors that have already run up in 2025, and investors will be better off paring stake in those themes?
A) Hot sectors such as solar, BESS and defence have seen some excessive valuations, there is also a margin impact on Solar equipment due to oversupply situation in the market, investors should reshuffle their portfolios accordingly.
Q) Mainboard initial public offerings (IPOs) have hit the 100-mark milestone (including SME) for the first time since 2007, raising nearly Rs 2 lakh cr mark. What are your expectations of 2026?
A) IPO fund raise momentum in 2026 should continue as domestic fund flows are still strong. There is good pipeline of companies that have filled DRHPs with SEBI which will be coming to market for fund raise next year.
Q) What were your big learnings from the year 2025 you would want to share with readers?
A) The importance of discipline over conviction – markets this year reminded us that even strong structural stories can underperform when liquidity and sentiment turn.
As a fund manager, staying anchored to process and risk management mattered far more than chasing themes.
Across cycles, quality businesses with strong balance sheets, pricing power and cash flows quietly deliver, while momentum trades fade. 2025, in many ways, reminded us that compounding is also built in quiet phases, not only in bull runs.
Q) What will be the big triggers for equity markets in 2026?
A) Full pass on benefit of the RBI rate cuts of 125 bps over 2025 will happen next year which help in generating more free cash flow for investment by corporates and reduced EMIs for consumers leading to more money for consumption.
FII may also return next year as market valuation have come down to long term averages and FII participation in Indian market is at a decadal low.
India US Tariff resolution will provide a huge boost to exports especially in Textile, Chemicals, precision components manufacturing industries in India.
Q) If someone plans to invest, say Rs 10 lakh in 2026 – what should be the ideal asset allocation for someone who is in the age bracket of 30-40 years?
A) Equities especially in the smallcap segment have pockets of value. Each investor has his own goals and risk appetite. Therefore asset allocation would depend accordingly.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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