Roots of Resilience: Navigating Volatility with Conviction

Dear Investor,

Over the past year, Indian equity markets have been caught in a tug-of-war between structural resilience and cyclical headwinds. The Nifty 50 has managed a modest +2.3% in the last 12 months, while the Nifty Next 50 is down ~8% and small caps remain in the red. Earnings growth has slowed to 7.5%—marking five consecutive quarters of single-digit gains—reflecting a soft patch in demand and margins.

Yet beneath this near-term turbulence lies an India that continues to stand out as a macroeconomic outlier. GDP is projected to grow at 6.5% in FY2026, manufacturing PMI remains above 59, and forex reserves of ~$689 billion offer one of the strongest external buffers globally. Inflation is anchored below 5%, the RBI has begun its easing cycle with a 50 bps repo rate cut to 5.50%, and Brent crude prices under $78/bbl are easing imported cost pressures.

The Bigger Picture – Roots Over Branches

As the saying goes, strike at the root of the tree and the branches will take care of themselves. For us, that “root” is India’s domestic growth engine—robust consumption, sustained government capex of ₹11.11 lakh crore, and a revival in private investment. Urban demand remains strong, rural demand is reviving with a good monsoon, and policy reforms continue to deepen India’s manufacturing and digital footprint. Global trade frictions—from US tariffs to EU compliance rules—may cause near-term jitters, but they also create strategic openings. The recently concluded India–UK FTA (zero tariffs on 99% of exports) and ongoing US trade dialogue could be game changers for engineering goods, textiles, and high-value manufacturing.

Staying the Course in Volatility

History has shown that phases of sentiment-driven volatility, without structural cracks, often present attractive entry points for disciplined investors. At PMS AIF WORLD, the focus remains on guiding clients to protect capital first and compound it thoughtfully thereafter. Current opportunities are concentrated in policy-backed and demand-resilient segments such as defense, fertilizers, capital goods, and market infrastructure, where underlying fundamentals remain strong and order books continue to expand.

As we step into the festive season and H2 FY26, we see catalysts aligning—lower borrowing costs filtering through, government spending peaking, and trade opportunities expanding. For investors with a three-year horizon, this is not a time to retreat—it’s a time to stay invested and selectively add exposure.

At PMS AIF WORLD, we remain committed to giving you not just Investment Services, but context—rooted in data, driven by analysis, and guided by long-term conviction.

Our endeavors are to determine the Quality, Risk, and Consistency attributes (QRC). We present all data and analytics with an endeavor and the aim of informed investment decisions. If you are looking to invest and are not able to decide between PMS and Mutual Funds, or between PMS and Alternative investment funds, Book A Video Call with our experts.