Global diversification, strong domestic fundamentals key for investors in 2026: Experts

Kolkata, Dec 24 (PTI) Market experts on Wednesday advised investors to focus on global diversification alongside India's strengthening domestic fundamentals while planning their portfolios for 2026, citing currency depreciation risks and a structurally improving Indian economy.

Speaking at a session titled 'Where to Invest in 2026' organised by the Merchant's Chamber of Commerce and Industry (MCCI), experts highlighted that while India remains the fastest-growing large economy, investors need overseas exposure to protect long-term purchasing power.

Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers, said the Indian rupee has historically depreciated by around 40 per cent every decade, significantly eroding global purchasing power over time.

"When currency depreciation is combined with a tax structure where nearly half of an individual's income goes to the government through direct and indirect taxes, the effective purchasing power in global terms falls sharply," Mukherjea said, adding that an investor may be left with only about 30 cents out of every dollar earned to fund long-term goals such as international education or retirement.

To mitigate this risk, Mukherjea urged investors to diversify globally through the GIFT City framework. He said an equity portfolio evenly split between the Nifty 50 and the S&P 500 has historically delivered superior returns with lower volatility compared to portfolios focused solely on domestic markets, describing the benefit as a "free lunch in finance".

He also credited recent government reforms, including cuts in capital gains taxes on overseas investments and the operationalisation of GIFT City, for making global diversification more accessible and cost-efficient for Indian residents.

Highlighting the domestic investment landscape, Samir Agarwal, Director of Indcap Advisors, said India continues to stand out as the fastest-growing large economy, with real GDP growth expected in the range of 6 per cent to 6.5 per cent.

Agarwal said the current growth cycle is domestically driven, supported by a 30 per cent year-on-year increase in public capital expenditure between April and October of the current financial year. He added that inflation has moderated to around 4 per cent, creating room for a more growth-supportive interest rate environment.

He also pointed to a marked improvement in corporate balance sheets, with median corporate gearing declining to about 0.5 times and interest coverage ratios at multi-decade highs, indicating a financially disciplined growth phase.

According to Agarwal, sectors such as financial services, consumption, technology and healthcare are likely to remain long-term wealth creators as they benefit from structural demand and scalable business models. PTI BSM NN