Kotak Mahindra AMC’s Market Outlook 2026: Midcaps poised to outperform; gold, silver to see upside, says Nilesh Shah

Kotak Mahindra Asset Management Company (AMC) on Wednesday released its Market Outlook 2026 report offering a comprehensive view of the macroeconomic environment that is expected to shape India’s financial markets in the coming year. 

The report, which came out on December 3, 2025,  sheds light on opportunities across equities, fixed deposits, and thematic sectors while highlighting global and domestic trends that investors should keep an eye for. 

“Equity returns in FY2026 are likely to be anchored in earnings growth, with India Inc expected to deliver double-digit growth in FY27,” said Nilesh Shah, managing director, Kotak Mahindra AMC.

This strength is likely to attract foreign portfolio investors (FPIs), supporting market liquidity, he said. 

“Midcaps are poised to outperform large and small caps, though the margin of outperformance may remain narrow. Gold and silver should continue to see upside, aided by sustained central bank buying,” Nilesh Shah added.

Investors have been advised to moderate return expectations, and adopt a balanced, diversified approach across asset classes to navigate evolving market dynamics.

In the equity investment space, Kotak Mahindra AMC has proposed four key sectors - financial services, consumption, e-commerce, and healthcare.

Financial Services

Credit growth has started to pick up, indicating improved lending activity. This uptick is reflected in the rising Credit to Deposit Ratio. The healthy credit growth is supported by strong fundamentals and improving capital adequacy.

Return ratios remain healthy making the sector attractive for long-term investors. The narrowing gap between credit and deposit growth could ease margin pressures, supporting profitability.

Consumption

Consumption is set for a strong rebound, aided by rising incomes, GST reforms, and festive demand. Rural Income per capita has crossed the $2000 mark, a key inflection point that typically drives higher discretionary spending, benefiting sectors like Autos.

With India among the lowest penetrated markets for two-wheelers and passenger vehicles globally, rising aspirations, GST tax relief, benign inflation, and rural recovery would drive demand. Monthly sales trends already reflect this momentum, signalling a structural shift toward higher consumption and premiumisation.

e-commerce

India’s e-commerce market offers significant growth potential, driven by low penetration and increasing digital adoption. Overall penetration is expected to rise to 12–13% by FY30, with categories like electronics and beauty & personal care leading the surge.

The market remains highly consolidated, with the top three players commanding nearly 80% share, creating a strong runway for scale and profitability as organised retail and premiumisation trends accelerate.

Healthcare

Healthcare spending is rising with aging demographics and increasing chronic ailments. India has one of the largest old age populations and the same is expected to double over the next 25 years. This structural shift would drive the growth in demand for healthcare services.

How does the fixed income space look?

As market conditions evolve, fixed income is set to play a meaningful role in retail portfolios by adding stability and helping manage risk. According to the Kotak Mahindra AMC report, India’s prospects of entering the Bloomberg Global Aggregate Index have also strengthened, with a formal decision expected in January 2026 and potential inflows of around $25 billion.

The report added that supportive macro fundamentals, along with balanced demand and supply dynamics, continue to provide a constructive outlook for the bond market.