Srikanth Subramanian, co-founder, MD and CEO of Ionic Wealth, has outlined a strategic investment approach for 2026, emphasizing caution over aggressive positioning as global economic uncertainties persist. Speaking exclusively to ET Now Swadesh, Subramanian shared insights on market outlook, sector preferences, and portfolio allocation strategies for the year ahead.

Market Outlook: Maintaining Cautious Stance

Subramanian advises against sudden optimism, noting that markets have remained cautious since September 2024, and this approach should continue into 2026. However, he sees potential for gradual improvement as corporate earnings show quarter-on-quarter growth patterns, supporting incremental increases in stock market valuations. The expert discourages lump-sum investments, instead recommending a staggered investment approach to navigate market volatility.

Portfolio Allocation Strategy

For 2026, Subramanian recommends a specific portfolio structure to balance growth potential with risk management:

Within the precious metals allocation, he suggests 75% in gold and 25% in silver, noting that while silver offers higher volatility, gold remains more stable and predictable.

Large Caps as Defensive Core

In volatile market conditions, Subramanian emphasizes that investors naturally gravitate toward quality investments. Large-cap companies are better positioned due to their strong balance sheets, substantial cash reserves, and proven ability to navigate global disruptions. While small caps faced significant pressure in the previous year, and 2026 may offer some recovery opportunities, large caps are expected to remain the defensive foundation of investment portfolios.

Asset Allocation: The Key to 2026

Subramanian designates 2026 as the 'year of asset allocation,' arguing that investing solely in stocks is no longer ideal given simultaneous global economic and geopolitical impacts across asset classes. Multi-asset strategies combining equity, debt, and commodity instruments help prevent total portfolio decline when individual asset classes weaken. Hybrid and multi-asset funds provide risk reduction through diversified market segment investments, offering a more rational approach for investors uncomfortable with market fluctuations.

SIP Investments Provide Market Stability

Despite foreign institutional investor outflows, Indian markets have maintained stability due to record-high Systematic Investment Plan contributions. Subramanian notes that SIP investments are inherently sticky and provide long-term market strength. He believes investors will continue SIP subscriptions unless returns completely disappear for extended periods, as this investment method allows participation across various market phases and represents one of the safest approaches for generating returns in volatile conditions.

Sector Leadership and Opportunities

Subramanian identifies three sectors currently showing leadership potential:

The IT sector presents mixed prospects due to AI and deep-tech disruption affecting traditional software models, while Capital Goods and Power sectors face pressure from tariffs and global trade policy challenges.

Commodity Outlook and Dollar Impact

Regarding precious metals, Subramanian notes that weakening dollar policies aimed at improving export competitiveness tend to increase commodity prices. Geopolitical risks have encouraged central banks to diversify beyond Treasuries into gold reserves, sustaining demand. Silver offers additional advantages through its applications in electric vehicles and solar power generation, though it carries higher volatility compared to gold's stability.

Source: https://www.etnownews.com/markets/exclusive-stock-market-outlook-by-ionic-wealth-ceo-srikanth-subramanian-should-investors-lower-expectations-which-sector-is-likely-to-lead-article-153498468