Nilesh Shah outlines how to build a resilient portfolio in the current market—Key sectors to focus on

Stock Market: Kotak AMC’s Nilesh Shah says the Indian market has now entered a slow-moving phase after a strong rally, and investors must reset their expectations. In an exclusive conversation with Zee Business managing editor Anil Singhvi, Shah discussed market direction, asset allocation and sector strategies for the coming year.

Shah said the market is now trading at a premium to global peers and close to its long-term average valuations. This makes further rerating difficult.

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“From here, returns will only come through earnings growth. Expect high single-digit to low double-digit growth,” he said. He added that the market will move “like a turtle — slow but forward.”

Shah noted that despite the slowdown, retail investors remain steady. Flows into mutual funds have stayed strong as investors have become more mature, investing regularly with realistic return expectations.

Shah remains constructive on gold and silver because central banks globally continue to buy aggressively.

However, he cautioned that unlike equities, gold and silver have no intrinsic value creation. “Invest in limited quantities. Buy with central banks, and exit when they start selling,” he said.

He also highlighted multi-asset allocation funds as the best option for investors who lack the time or expertise to manage multiple asset classes.

On equities, Shah expects a performance hierarchy next year: midcaps will outperform, followed by largecaps, while smallcaps are likely to remain comparatively weaker.

For investors with moderate risk appetite, he recommended large & midcap funds. Those willing to take higher risk can allocate more to pure midcap funds but should still keep some exposure to largecaps for stability.

Shah expects banking and financial services and healthcare, especially hospital chains, to deliver strong performance in 2026.

Banks and NBFCs may see temporary pressure if interest rates are cut, but he sees this as an opportunity to accumulate.

In healthcare, rising income levels and higher spending on medical services will benefit organised hospital operators, he said.

Shah said a US–India tariff deal could revive American investor sentiment, making India more attractive for fresh flows. While exports may not see major direct benefits, sectors like textiles, aquaculture and gems & jewellery could gain.

However, he added that the overall market reaction will be limited, as part of this expectation is already priced in.

Shah ended by saying that investors should stay disciplined, moderate return expectations, and use dips to accumulate long-term winners.

“Invest regularly and stay patient. That is how you build a resilient portfolio,” he said.