2026 begins with global markets at a crossroads. The AI revolution is reshaping valuations across sectors, interest rates remain elevated, and geopolitical tensions continue to create uncertainty. Here's our data-driven outlook for the year ahead.
Key Themes for 2026
- AI Monetization Phase: The focus shifts from AI potential to AI revenue realization
- Rate Normalization: Central banks navigating the soft landing endgame
- India's Moment: Structural reforms and demographics driving growth
- Supply Chain Restructuring: China+1 strategies accelerating
- ESG Evolution: From compliance to competitive advantage
Global Equity Outlook
US markets face valuation headwinds but earnings growth remains supportive. We expect mid-single-digit returns with high dispersion—stock selection matters more than ever. European equities offer better value but face growth challenges.
India: Preferred Market
India remains our top pick among emerging markets. Strong domestic flows, earnings growth of 12-15%, and structural reforms provide a favorable backdrop. The NIFTY 50 at 26,000+ isn't cheap, but quality commands a premium. We favor large-cap financials and IT services.
Risk Factors to Monitor
- US election cycle volatility
- China property sector resolution
- Energy price spikes from geopolitical events
- AI bubble concerns if monetization disappoints
- Currency volatility in emerging markets
Portfolio Positioning
We recommend a balanced approach: overweight India and select EM, neutral on US with tech selectivity, underweight Europe. Maintain quality bias across regions. Consider alternative data strategies for alpha generation in a stock-picker's market.