“Looking back, 2025 was difficult. And I see 2026 as fragile, not only for India but globally,” Tandon said. “The challenge which I see in 2026 is not about India. The worry is about the US market because extraordinary complacency is there.”
Tandon warned that global equities could be headed for a sharp valuation reset, making a strong call that 2026 could be marked by widespread multiple compression. “I am taking a big call that this year belongs to PE contraction globally,” he said, adding that corrections in developed markets could be sharp.A major trigger for such a move, according to him, could be a near-term resurgence in the dollar index. While acknowledging a longer-term structural downtrend for the dollar, Tandon cautioned that positioning has become crowded. “The biggest risk which I see coming is the rise of the dollar index, because it is a consensus trade among all strategists and economists globally,” he said. “That is the risk which I see, which means a lot of things can correct sharply.”
The discussion also flagged near-term risks in commodities, particularly metals, which have seen a strong rally. While reiterating a long-term bullish stance on commodities, Tandon described the recent surge as excessive. “From a near-term perspective, we have seen an extraordinary spike happening, and I think it is a euphoric move,” he said. “I will not call it a bubble… but a correction is around the corner.”
Invesco Mutual Fund CIO Taher Badshah said the market setup increasingly points towards mean reversion across multiple variables after several years of linear trends. “2025 has been a unique year in many ways,” Badshah said, noting that despite significant rate cuts and strong domestic inflows, markets failed to deliver returns.
“Quite a number of things have worked in a very linear manner over the last two or three years, especially after Covid,” he said. “Therefore, it is quite likely that, in many ways, we are set up for mean reversion in many things.”
Badshah said mean reversion could play out across the dollar, earnings growth and India’s relative performance. “We have seen a significant amount of underperformance in the last one year. Can that mean revert? Can we see mean reversion in global markets?” he asked.
He also flagged risks in global technology and artificial intelligence-led trades. “As Sandeep indicated, the whole AI trade has dominated and led to almost a bubble-like scenario developing,” Badshah said, adding that investors would need to be far more selective going forward.Mirae Asset Investment Managers (India) CIO Nilesh Surana offered a more constructive medium-term view on Indian equities, arguing that 2025’s weakness needs to be seen in context. “If you look at the scorecard, the Nifty had ten consecutive years of positive returns, even in the Covid year on a calendar-year basis, which has never happened in the history of any developed market,” Surana said.
He identified three key headwinds behind the recent correction—macro uncertainty, slowing earnings momentum and elevated valuations—and said all three are now easing. “All three are receding,” Surana said.
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On the macro front, Surana pointed to fiscal and monetary support. “We have income tax cuts, more money in the hands of people, and interest rate reductions of 125 basis points, the full impact of which we will see,” he said, adding that liquidity infusion would also support growth.
Earnings, he said, are likely to improve after a prolonged slowdown. “Over the last two years, earnings growth has been in low single digits. We see it moving over the next couple of years to low teens,” Surana said. “In that context, the view is positive and constructive.”
However, he cautioned investors against expecting quick gains. “If you are looking for steady long-term returns, this is a good market,” he said. “But if you are looking for quick and easy money, that era which we saw in 2023 and 2024 may rightfully pause here.”
While trade-related uncertainty remains a key variable, fund managers broadly agreed that the Indian market’s long-term fundamentals remain intact. However, as markets transition into a phase driven more by earnings delivery and valuation discipline, selectivity is expected to be crucial in navigating what could be a volatile 2026.
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Watch accompanying video for entire discussion.
