From gold to large caps: Where PL Wealth sees opportunities for investors

India’s equity markets may remain volatile in the near term due to crude oil prices, inflation trends and geopolitical developments, but investors may continue to find opportunities across quality large-cap equities, fixed income and gold, according to the latest market outlook report by PL Capital.

In its May 2026 market outlook, the wealth management arm of the group said domestic liquidity, infrastructure-led growth and rising financialisation of household savings continue to support India’s long-term investment story despite near-term uncertainty.

The report suggested investors may prefer quality large-cap and flexi-cap strategies in equities, maintain selective exposure to domestic cyclicals and manufacturing-linked sectors over the medium term, while also considering gold as a strategic portfolio diversifier amid global volatility.

Indian markets started May after witnessing a strong recovery in April, supported by resilient domestic economic conditions, easing geopolitical tensions following the temporary truce between the United States and Iran, and a steady start to the Q4FY26 earnings season.

According to the report, domestic institutional and retail investors continued to offset foreign portfolio outflows, helping stabilise markets despite higher US bond yields, elevated crude oil prices and a stronger dollar.

The report said this shift reflects a broader structural change in Indian markets, where domestic liquidity has increasingly emerged as a key stabilising force.

Domestic cyclical sectors including real estate, capital goods, industrials, utilities and power led gains during the month, supported by expectations of sustained infrastructure spending, manufacturing expansion and higher capital expenditure. Information technology stocks, however, underperformed amid weaker global demand and slower technology spending trends.

Inderbir Jolly, CEO of PL Wealth, said Indian equity markets have continued to remain resilient despite heightened global uncertainty and geopolitical risks.

“Even in the midst of rising global uncertainty and occasional volatility due to geopolitical events, Indian equity markets have continued to exhibit robustness,” Jolly said.

He added that India’s structural growth story remains supported by domestic consumption, manufacturing growth, infrastructure investments and increasing participation of household savings in financial assets.

The report advised investors to maintain disciplined asset allocation, focus on high-quality companies and adopt a staggered investment approach amid volatile conditions.

PL Wealth said India ended FY26 on a relatively stable footing, supported by domestic consumption, government-led capital expenditure and strength in the services sector. High-frequency indicators such as GST collections, vehicle sales, credit growth and e-way bill generation continued to indicate economic resilience, although growth momentum has moderated compared to earlier quarters.

At the same time, the report cautioned that elevated crude oil prices linked to tensions in West Asia could increase risks related to inflation, the rupee and the current account deficit. It also noted that developed market central banks remain cautious due to persistent inflation concerns.

On valuations, the report observed that the sharp rally in equities over the past year has reduced valuation comfort, particularly in speculative small- and mid-cap segments where earnings visibility remains limited.

According to the report, market leadership is gradually shifting toward quality large-cap companies with stronger balance sheets, higher institutional ownership and relatively better earnings visibility. It added that expected market returns may moderate compared to the outsized gains seen between 2021 and 2024.

For the short term, PL Wealth said allocation preference may remain tilted towards quality large-cap and flexi-cap strategies, balanced advantage funds and banking-oriented exposure while markets remain event-driven.

Over the medium term, the report expects earnings recovery to broaden across domestic cyclicals, infrastructure-linked sectors and manufacturing beneficiaries as external volatility stabilises.

On fixed income, the report maintained a supportive outlook, citing stable inflation, ample liquidity and the Reserve Bank of India’s neutral monetary policy stance. It added that investors may consider higher-duration strategies in high-grade debt portfolios while remaining watchful of inflation and currency-related risks.

The report also highlighted gold’s evolving role from a traditional currency hedge to a reserve asset amid continued buying by central banks and diversification efforts globally. Gold prices are expected to remain range-bound to positive in the near term, while silver may continue to witness elevated volatility due to uneven investment demand.