In 2025, gold rose 72%, silver 122%, Nifty 500 7%. What does 2026 hold?

Gold held its gains on multiple structural supports. Silver ran harder because it's caught between tightening supply and surging industrial demand.

The investment landscape of 2025 was a tale of two extremes: while the Nifty 500 languished with a modest 7% return, precious metals delivered a once-in-a-generation rally, with Gold gaining 72% and Silver 122% in INR terms. However, according to the Global Economic Outlook 2026 released by 1 Finance Research on February 25, 2026, the "narrative-chasing" strategies of last year are unlikely to work today. As India transitions from  "transitory slowdown" into "strong recovery," investors must pivot from defensive bullion plays back toward selective equities. 

The Macro Shift: From Slowdown to Recovery

India’s economy is hitting an inflection point. After a 2025 marked by FPI outflows and a 6% rupee depreciation, the proprietary 1 Finance Macroeconomic Index (1FMI) indicates a definitive shift toward recovery.

 

 

Growth & Inflation: India’s GDP is projected to grow at 6.7% in CY26, with inflation cooling to an average of 3.9%.

 

Monetary Tailwinds: This macro setup creates a window for the RBI to deliver a 50–75 bps repo rate cut in 2026, a move that historically triggers a re-rating of equity valuations.

 

Equities: The Case for Indian Large Caps

While 2025 saw Indian equities underperform global peers, the risk-reward equation for 2026 favors the home turf, particularly at the top end of the market capitalization curve.  Investor Playbook: The 2026 Outlook at a Glance 

While U.S. equities are weighed down by expensive valuations (S&P P/E: 29.4x) and tariff-driven inflation risks, markets like the UK, China, and Japan offer more compelling setups heading into 2026. The U.S. and Euro Area carry a negative outlook

   

Large Caps (Risk Rating 1/5): 1 Finance gives Large Caps a highly positive outlook. Supportive valuations and the potential for FII re-entry make them the safest bet for a recovery play.

 

Mid & Small Caps (Risk Rating 2/5): Outlook remains positive, driven by banking sector reforms and a revival in rural consumption, though they remain more sensitive to global growth fluctuations.

 

Global Contrast: The outlook for the U.S. (P/E at an expensive 29.4x) and the Euro Area is negative, hampered by high debt and tariff risks. Instead, 1 Finance suggests looking toward China, Japan, and the U.K. for compelling setups. 

Precious Metals: A Neutral Stance After the Surge

After the historic returns of 2025, the research firm has moved to a Neutral (3/5 Risk) rating for both Gold and Silver. While structural supports remain, the vertical climb of last year is expected to consolidate.

 

Gold: Structural support persists via central bank buying (863 metric tonnes in 2025) and falling real yields, but slower jewelry demand and a potentially stronger dollar could cap gains.

 

Silver: Despite a fifth consecutive year of supply deficit and booming demand from the solar and electronics sectors, 1 Finance warns of profit-taking after the 122% surge. 

Gold held its gains on multiple structural supports. Silver ran harder because it's caught between tightening supply and surging industrial demand.

 

The key findings state that:

India's GDP is projected to grow at 6.7% in CY26, with inflation expected to average 3.9%, creating room for a 50–75 bps repo rate cut in 2026.

 

The global rate-cut cycle is slowing sharply: the Fed is expected to deliver just 2 cuts in 2026, the ECB is likely to pause, and the Bank of Japan is expected to hike.

 

India's 1 Finance Macroeconomic Index (1FMI) placed the economy in a transitory slowdown phase in 2025, which transitioned to a strong recovery in 2026 beginning.

 

Gold gained 72% (in INR) in 2025 on central-bank buying (863 metric tonnes) and falling real yields. The structural support remains intact in 2026.

 

Silver surged 122% (in INR) in 2025, driven by a fifth consecutive year of supply deficit and accelerating solar and electronics demand, with 2026 expected to see the largest deficit in over a decade.  Asset class outlook for 2026 

Asset class outlook

 

Indian Markets Are Recovering, but Selectively:

Indian equities underperformed most global markets in 2025, hit by FPI outflows, rupee depreciation (down 6% against USD in 2025), and weak urban consumption. The recovery is beginning, but it is uneven. Large caps are better positioned than mid and small caps, given stronger earnings visibility and FII re-entry potential.   

"2025 rewarded people who chased narratives. 2026 is a different game. Rate cuts are slowing, geopolitical risks are recurring rather than one-off, and India is at an inflexion point. The investors who do well this year will be the ones who understand which macro phase we are in and position accordingly. The data says India has transitioned from slowdown to recovery. The asset allocation needs to reflect that shift before it becomes obvious," said Animesh Hardia, SVP, Quantitative Research, 1 Finance.

 

The 2026 Global Economic Outlook does not predict a market crash or a euphoric melt-up. In Indian markets, the case for large-cap equities is grounded in rate cuts, improving earnings, and macroeconomic recovery. In precious metals, the case seems neutral for both gold and silver. In global markets, the message is clear: not all equity markets are the same, and 2026 will reward those who look beyond the headline index.