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 index performance and market breadth has quietly laid the groundwork for selective alpha generation.

Globally, the investment landscape is marked by a clear shift. The era of synchronized tightening is behind us, giving way to policy divergence, regional differentiation, and sectoral rotation. Investors are increasingly being forced to answer harder questions: around return on capital, fiscal sustainability, and the monetization of large capex cycles, rather than simply riding liquidity waves.

Against this backdrop, several themes appear increasingly relevant in current market discussions:

• Favoring earnings resilience over narrative strength
• Prioritizing valuation discipline and balance sheet quality
• More active consideration of asset allocation and interest rate sensitivity
• Seeking diversification across geographies, currencies, and real assets

This outlook reflects key considerations shaping current discussions across domestic and global equities, fixed income, real assets, and commodities. Anchored in realism but aligned with opportunity.

2026 is not about chasing what worked. It is about trusting what endures.

We at Waterfield consider ourselves custodians of trust. Trust, once tested, is rebuilt slowly through consistency, evidence, and discipline rather than conviction alone. Markets in 2026 reflect a similar reality. The exuberance of past cycles has given way to scrutiny, patience, and a renewed respect for fundamentals. Capital is becoming more discerning, reward is increasingly tied to execution, and resilience matters more than speed.

In this environment, progress will not be linear, but it can be durable. Learning to trust again, in markets as in decisions, is less about believing blindly and more about moving forward with clarity, integrity, and intent.