Fund managers urge diversification amid AI and valuation concerns

As the curtain drops on a year of volatile trade, equity investors are pinning hopes on a calmer 2026. With the consensus in favour of the Nifty gaining 8-14% in the new year, as per a recent ET Markets poll, the mood is far more assured than it was early in 2025. It’s underpinned by expectations of a recovery in corporate earnings growth in H2, foreign fund flows reviving and the India-US trade deal getting sealed.

Still, investors are not letting their guard down entirely as the risk-off sentiment toward India is yet to ease, with valuations staying pricey and uncertainty over burgeoning AI trade in the US. Adding to it is a strong IPO pipeline, as well as gold and silver as alternatives. Fund managers and investment advisers have one clear message: spread risk across stocks, hybrids, precious metals and fixed income.