ETMarkets Smart Talk | Polarised markets, weak breadth, but India enters 2026 on a strong macro footing: Devang Mehta

Indian equity indices may be hovering near record highs, but beneath the surface the The primary risk remains a potential correction in the currently high-flying AI sector. market tells a far more nuanced story. A sharp divergence between headline benchmarks and broader market performance has left portfolios under pressure even as the Nifty stays resilient. In this edition of ETMarkets Smart Talk, Devang Mehta , Deputy Managing Director & CIO - Equity NDPMS, Spark Capital Private Wealth, decodes the growing polarisation, weak market breadth, and deep corrections across stocks , while explaining why India’s strong macro fundamentals-robust GDP growth, low inflation, healthy consumption, and improving earnings visibility-could provide a solid foundation as investors step into 2026. 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) Nifty50 is trading around all-time high, but portfolios are reflecting a completely divergent trend. Broader market is telling a very different story. Market breadth has been extremely weak, and polarisation has been the buzz word. From a universe of 1,518 listed companies with Market Capitalization >1000 Cr, here’s what the drawdown picture looks like: 1. 82% of stocks are down more than 10% from their 52 week highs 2. 60% are down more than 20% 3. 34% are down more than 30% 4. 14% are down more than 40% Median Drawdown has been ~24% Also, if you look at most of the developed and emerging market performance for 2025, India is somewhere very close in the bottom league. We are still close to September 2024 levels on the headline indices and if we dissect the broader markets, a huge price and time correction has happened despite earnings improvement and growth. India specifically is entering 2026 on a solid footing, supported by robust GDP growth, low inflation, and strong domestic consumption driven by policy measures like GST rate cuts. Corporate earnings are expected to see double-digit expansion globally and in India which would support current market valuations. 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) Following a blockbuster 2025, the outlook for gold and silver in 2026 remains generally bullish, with prices expected to consolidate at higher levels and potentially reach new highs. This positive sentiment is driven by persistent geopolitical uncertainty, strong institutional and industrial demand, and expectations of a more accommodative global monetary policy. Sustained, aggressive buying of gold by central banks for reserve diversification, alongside renewed inflows into gold and silver Exchange-Traded Funds (ETFs), is a key structural support. However, given the significant gains in 2025 and technically overbought conditions, potential short-term pullbacks or price corrections may keep the prices volatile. 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...

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