The past two years have been about excess and correction. 2024 was driven by new narratives and liquidity optimism. 2025 was a year of normalization: valuations compressed, breadth weakened, and leadership narrowed.

As 2026 begins, markets appear to be entering a different phase.

Across asset classes, we are entering a phase of realignment, where inflation is moderating, policy rates are stabilizing, earnings visibility is improving, and capital is once again being priced on durability rather than momentum. This convergence of macro stability and valuation discipline creates a more balanced and investable environment than we have seen in recent years.

In India, a year-long consolidation has reset expectations meaningfully. While headline indices remain near highs, the underlying market tells a more nuanced story: earnings dispersion is wide, valuations across mid and small caps are reasonable, and domestic growth drivers are reasserting themselves. This divergence between inde…