Franklin Templeton CEO Jenny Johnson expressed unwavering confidence in both US and Indian markets during the World Economic Forum 2026 in Davos, emphasizing that global volatility and geopolitical uncertainties have not diminished her optimistic outlook on these key growth engines. Speaking to CNBC-TV18, Johnson highlighted strong fundamentals and long-term growth drivers that continue to make both markets attractive for investors.

US Market Outlook and AI Potential

Johnson's bullish stance on the US market centers on political support for economic growth ahead of midterm elections, which she expects to provide near-term tailwinds. She emphasized that artificial intelligence represents a significant long-term opportunity that remains largely untapped across broader sectors.

"We haven't yet seen real benefits from AI in the broader sectors," Johnson noted, explaining that current investments have primarily focused on infrastructure and technology providers like NVIDIA and Microsoft. The real impact will emerge when companies leverage AI to improve productivity and business outcomes across various industries.

India's Compelling Growth Story

Johnson identified India as one of the most compelling global growth stories, particularly due to its domestic demand-driven economy that offers insulation from geopolitical shocks. She highlighted several key factors supporting India's investment attractiveness:

The CEO praised India's institutional framework and talent pool, noting that the quality of engineering graduates from institutions like IITs is exceptional and globally recognized. She also acknowledged the supportive policy environment, referencing the popular saying that "India grows at night while the government sleeps" while crediting recent government efforts in creating a better business and investment environment.

Franklin Templeton's Strong India Performance

Franklin Templeton celebrated 30 years of operations in India with notable achievements during the recent period. The asset manager demonstrated strong momentum across multiple business segments:

• Launched four new products during the year
• Recorded one of the best-ever sales performances
• Achieved eight consecutive quarters of positive sales
• Introduced one of its first private credit funds in India
• Established operations in GIFT City for global capital attraction

Johnson highlighted the firm's unique position as a multinational manager with strong local asset management capabilities. Many Indian investors view Franklin Templeton as a local company, particularly due to its early role in promoting systematic investment plans (SIPs). The growth in SIP inflows over the past five years has been remarkable, rising from approximately ₹6,640 crores annually to about ₹27,390 crores, reflecting the growing culture of long-term savings in India.

Market Dynamics and Future Strategy

Regarding foreign investment flows, Johnson acknowledged that overseas investors have shown caution toward India due to valuation concerns. However, recent market corrections, combined with supportive monetary and fiscal policies, have improved the investment outlook. Currency movements also influence returns for international investors, but India's fundamental strengths remain intact.

Franklin Templeton's GIFT City license represents a strategic initiative to attract global capital while offering Indian investors access to international investment opportunities. The firm plans to develop products specifically designed for foreign investors seeking Indian market exposure, while simultaneously providing global investment options to domestic investors. This dual approach aims to leverage the firm's local asset management expertise to tell the India story and attract international capital to one of the world's most dynamic markets.

Franklin Templeton Asset Management (India) has outlined a positive growth trajectory for India in its annual outlook, projecting GDP growth of 7.3% for FY26 despite ongoing global uncertainties. The fund house expects the country's resilient performance to be supported by easing monetary conditions, moderating inflation, and improving valuation comfort across asset classes.

India's Structural Growth Foundation

The fund house emphasized India's continued demonstration of structural strength throughout 2025, despite global challenges including geopolitical tensions and uneven worldwide growth. Key factors anchoring the country's long-term fundamentals include:

• Progress in digital inclusion initiatives
• Ongoing infrastructure development projects
• Strengthening domestic capital formation
• Emergence of GIFT City as a significant financial gateway

Franklin Templeton noted that Indian equities are positioned to close higher for a tenth consecutive calendar year, contingent on market stability through year-end. The firm observed that large-cap stocks outperformed mid- and small-cap segments during 2025, while overall market valuations became more attractive compared to the previous year.

Economic Projections and Monetary Policy Outlook

The fund house's economic forecasts present a measured growth scenario for India:

Regarding monetary policy, Franklin Templeton highlighted that the Reserve Bank of India implemented cumulative repo rate cuts of 125 basis points during 2025, contributing to improved financial conditions. While bond yields declined and the yield curve began steepening, the firm anticipates limited scope for additional rate cuts in 2026, particularly if economic growth aligns with official projections.

Global Investment Themes for 2026

Franklin Templeton Institute has identified three cyclical themes shaping its global investment perspective: broadening, steepening, and weakening. The institute expects investment opportunities to expand beyond the United States as profit growth improves across regions and asset classes. Yield curves are anticipated to steepen as declining short-term interest rates encourage portfolio shifts from cash to equities, credit, and longer-duration fixed income securities.

A weaker US dollar could potentially support emerging market equities and debt while influencing broader portfolio allocation strategies. Within this framework, the institute views emerging markets, European equities, and US small-cap stocks as potential leaders for 2026, while US equities, including the information technology sector, may continue delivering steady returns.

Sector Opportunities and Investment Strategy

For the Indian market, Franklin Templeton identified several sectors that could offer selective opportunities in the coming year:

• Financials: Benefiting from improved monetary conditions
• Consumption: Supported by economic growth momentum
• Real Estate: Capitalizing on infrastructure development
• IT Services: Continuing steady performance trends
• Capital Goods: Aligned with infrastructure expansion

In private markets, the firm highlighted commercial real estate debt, infrastructure assets, and secondary private equity offerings as preferred investment segments. The fund house emphasized that innovation, particularly in technology and digital finance, remains a crucial driver of long-term investment returns, though expanding government intervention presents potential risks to capital markets.

Franklin Templeton concluded by reiterating the importance of disciplined, long-term investing approaches as markets adapt to evolving global and domestic conditions throughout 2026.