Is it time to switch from gold to Indian large caps?

Gold has been the star of 2025. Prices have crossed ₹1 lakh per 10 grams, delivering a 61% return this year and outperforming equities, bonds, and oil. Fueled by global uncertainty, a weak dollar, and relentless central bank buying, gold became the world’s go-to safe haven. But every rally has its limits. The risk-reward balance for gold is now tilting, and the smart money is beginning to look elsewhere. “Invest Rightly, Switch Timely.” Gold has done its job as a hedge. Now, the next wealth-creation phase may belong to Indian large caps.

Gold’s rise has been built on fear, of inflation, of debt, of uncertainty. But the tide is shifting. Inflation is cooling, interest rates are staying higher for longer, and central bank demand for gold has started to plateau. When the fear trade runs out of fuel, the baton typically passes to equities.

History supports this rotation. Each time gold peaked in 2011, 2020, and now again, equity markets followed with a strong multi-year run. This time may be no different.

Indian large caps: Value meets visibility

Indian large caps are quietly building a strong case. Despite robust fundamentals, the Nifty has gained just around 7% year-to-date, trailing other emerging markets. Yet India’s growth story remains intact with a resilient economy, policy stability, and consistent corporate earnings growth.

Valuations look attractive. TCS is trading at roughly 21x FY26 earnings, near its five-year average. As global tech spending stabilises and margins recover, it is positioned for steady compounding. The company’s balance sheet strength and cash flow discipline make it a textbook large-cap opportunity.

ITC is another solid example. At 25x earnings and a dividend yield near 3.5%, it combines steady FMCG growth with an efficient capital structure. ITC may not offer daily excitement, but it represents the kind of compounder that builds enduring wealth quietly and predictably.

Why a rotation makes sense now

The market cycle is turning from fear to growth. Over the past 18 months, investors crowded into safe assets like gold and government bonds. But with corporate earnings

projected to grow 14–15% in FY26, and Nifty’s earnings yield near 4.6% compared to the 10-year G-Sec at 6.5%, the balance of risk and reward is swinging back toward equities.

Whenever gold has outperformed equities for two years straight, Indian stocks have historically delivered outsized gains afterward. Post the 2011 gold peak, for instance, Indian equities rallied 35% in the next two years, while gold corrected 20%. That pattern is now repeating.

This isn’t a call to abandon gold. It should still make up 8-10% of a diversified portfolio as insurance. But fresh capital is better deployed where growth visibility is strongest, in quality large caps.

The opportunity lies in disciplined rotation. IT, banking, and manufacturing leaders are entering a sweet spot of earnings recovery and valuation comfort. Investors who switch early could capture the next phase of compounding.

Gold has protected wealth. Indian large caps can now grow it. With earnings momentum building, valuations reasonable, and domestic liquidity strong, the setup for equities looks stronger than it has in years.

Stocks like TCS and ITC stand out, predictable, profitable, and attractively priced. For investors who believe in timing the cycle rather than chasing it, this could be the moment to shift from defensive safety to strategic growth.

Invest rightly, switch timely.

(The author is Co-founder, Ashika Global Family Office Services. Views are personal.)