Equity Investors Advised to Reset Return Expectations Amid Market Uncertainty

Market Outlook: Expert View

Amit Bivalkar, Head - Wealth at Equirus Group, has expressed concerns about the current market structure, urging investors to reset their return expectations and avoid taking extreme positions in equities. In an interview with Mint, Bivalkar emphasized that while the market appears resilient on the surface, there are clear signs of tightening underneath.

Market Resilience and Structural Weakness

Bivalkar noted that India remains one of the fastest-growing major economies, although growth expectations are gradually moderating as external headwinds build. Inflation, which had remained relatively benign for a large part of the previous year, is beginning to inch up again, while wholesale inflation indicates rising cost pressures within the system. The widening current account deficit, softer domestic demand trends, and elevated input costs suggest that the market is entering a more demanding phase.

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Return Expectations and Portfolio Rebalancing

Bivalkar advised investors to reset their return expectations, as markets are unlikely to deliver the kind of extraordinary returns seen during the liquidity-fuelled post-pandemic phase. He suggested that moderate double-digit returns from equities over the long term are more realistic, while fixed income is likely to generate relatively stable mid-single-digit returns. Portfolio rebalancing is also crucial in long-term wealth creation, as it introduces discipline into the investment process and helps maintain stability and alignment with long-term financial objectives.

Investor Behaviour and Asset Allocation

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Bivalkar highlighted the importance of disciplined investing, patience, and the ability to stay invested across cycles. He cautioned against overconfidence, herding behaviour, and emotional decision-making, which can destroy far more wealth than market cycles themselves. Asset allocation is far more important than individual stock selection, and investors should align their investments with their financial goals, time horizon, and risk tolerance.

Transition Phase and Long-Term Outlook

Bivalkar emphasized that we are in a transition phase, with growth moderating, inflation pressures building, and external balances needing monitoring. Markets will continue to offer opportunities, but they will reward discipline rather than aggression. He remains constructive on the long-term outlook, advocating a measured approach with balanced asset allocation and a meaningful role for fixed income alongside equities.