Why investors should stop predicting markets in 2026: Deepak Shenoy answers

I am going to enter 2026 with one fear: the fear of predicting anything. 2025 has a lesson for us in two aspects. One, is that we can predict nothing. If you had told me, in December 2024, that we would have 50 per cent tariffs on Indian exports to the US, the rupee would depreciate nearly 10 per cent, inflation would fall to 0.7 per cent, India would go to war with Pakistan, Gold and Silver would go absolutely nuts….I would have laughed at you. And I would have proudly said that if this happens, Indian markets will crash 30 per cent. 

  The second, most importantly, is that Indian markets are up 10 per cent instead. The markets have reacted to the above news with a “Chill, bro” response. Yes, if you take the median stock return, it has been negative, but some of the large caps have stayed strong enough to make markets overall go up. What it really means is that even if you predicted an event, you cannot imagine how the market will respond to it.  

This brings us to: what do we do in 2026? The answer is: respond, do not predict. There are a gazillion things that can happen, but we can neither predict them nor predict the market’s reaction to them. But more importantly, while small things are happening on the surface, tectonic shifts are happening underneath.  The world has slowly changed into a format that seems to hate trade - more tariffs, more restrictions on immigration, and, in general, a call to go local. In that context, India has never been able to get to a point where it is super competitive on manufacturing for exports, because of the higher cost of capital, high logistics costs, regulatory pain, etc. But it does have a very large domestic, consuming population. This allows us to push more local production for local consumption, just like the West, and break down the barriers to it - we are seeing low inflation reducing the cost of capital, a better logistics system emerging with technology and the government slowly addressing regulatory overload. The long-term implication is that we will produce more for domestic use and replace imports, and with improvements over time, get better at it.

 

The shift also changes workforce migration patterns, which will likely result in more people building in India and also consuming in India. While it has an initial shock value that seems negative, the longer-term impact is likely to create more businesses and entrepreneurs in India. The true value of a 1.4 billion population is if they can produce what they consume on a larger scale.

 

This shift might not be visible at the surface, where relatively short-term news dominates mind-space. The “reel” economy is very different from the real economy. If you say inflation is low, people tell you that their favourite restaurant increased their biryani prices by 10 per cent. But it is also true that prices of essential vegetables and pulses are roughly the same as they were a year back; this would make for a very boring reel, so it’s deemed unimportant. However, the long-term impact of lower inflation is lower interest rates, more consumer confidence and the ability to plan a few years ahead, and this is a very slow mindset shift.  

I am biased, of course, as a fund management company CEO. We are paid to be optimistic. But I would be dishonest if I were are not bullish about the long term, while apprehensive about the short term. We do not know what’s happening tomorrow, or even in the coming year, but we know we will take our hits, grow up, learn and prosper. 

  In this process, we will try things and fail. We have tried to promote shipping for five years now, and nothing much has happened. We are early in the days of pushing for more semiconductor manufacturing. We have not been able to get a deal from the US yet, though we finally have deals from Europe and a few other countries. We have lots of energy production, but still have blackouts in most of India. We need better water, better air, and less traffic. This means one thing: we have to keep trying.  

I love this line from a movie called “Finding Nemo”, where Nemo’s father is distraught because he promised his wife that he would not let anything ever happen to Nemo. Dory, a friend, says this: If you do not let anything ever happen to him, then how will anything ever happen to him? 

Let things happen to you in 2026, folks!  (Deepak Shenoy is CEO, Capitalmind AMC, which manages the Capitalmind Mutual Fund. Views expressed are his own.)