Can Investors Increase Equity Allocation to 60–65% as Medium-Term Risk-Reward Improves?
Synopsis
As Indian markets evolve, investors are urged to consider a 60-65% equity allocation to enhance their aggressive portfolios. The report emphasizes the positive medium-term outlook influenced by government infrastructure investments and projected earnings growth across various sectors.
Key Takeaways
Medium-term risk-reward dynamics improving in Indian markets.
Investors can consider 60-65% equity allocation .
Conservative investors should opt for higher fixed-income exposure .
Government focus on infrastructure development signals long-term growth.
Strong balance sheets and execution credibility are essential for investments.
New Delhi, Feb 16 (NationPress) As the medium-term risk-reward dynamics of Indian markets show signs of enhancement, investors with a taste for aggressive portfolios may contemplate an equity allocation of 60–65 percent. Meanwhile, more conservative investors might prefer a larger portion of fixed-income assets and maintain a tactical cash reserve of around 5 percent, according to a report released on Monday.
PL Wealth, the wealth management division of PL Capital, highlighted in the report that although Indian equity markets are currently in a consolidation phase, they continue to follow a strong structural trajectory, with medium-term risk-reward dynamics gradually improving.
The government's ongoing focus on infrastructure development, expansion of logistics, enhancing manufacturing competitiveness, and boosting digital capability in the Union Budget for FY27 indicates a long-term growth strategy rather than a transient cyclical stimulus, the firm noted.
The emphasis on capital expenditure is expected to improve corporate earnings visibility into FY27, especially in sectors linked to infrastructure, capital goods, defense manufacturing, electronics, and industrial supply chains, according to the report.
Over the medium term, sectors associated with infrastructure, defense, logistics, capital goods, and certain manufacturing themes are anticipated to remain well-supported. Export-oriented sectors such as engineering goods, textiles, and gems and jewelry could benefit from enhanced trade visibility and ongoing global supply chain adjustments, the report stated.
Global uncertainties, currency fluctuations, and adjustments in earnings have somewhat dampened short-term sentiment, amidst fiscal momentum, macro stability, and better investment visibility.
Investor positioning is expected to adapt dynamically to domestic policy signals and the evolving clarity surrounding India–US trade relations, which could impact export-driven and capital-intensive sectors. Investment preferences should shift towards companies with strong balance sheets, execution credibility, and sustainable earnings visibility, the firm advised.
“Currently, Indian markets are managing global volatility and undergoing an earnings recalibration phase, but the underlying domestic fundamentals remain strong,” stated Inderbir Singh Jolly, CEO of PL Wealth Management.
According to PL Wealth, sectors like financials, automobiles, industrials, and IT services have shown relative strength, while consumer-focused and select banking segments have encountered near-term challenges. As government spending accelerates and order inflows convert into revenue growth, a broader earnings recovery is anticipated into FY27, serving as the fundamental catalyst for a more sustained market uptrend, the firm projected.
Point of View
It is crucial for investors to remain vigilant. The balance between aggressive equity investments and conservative fixed-income strategies is essential. As the report suggests, while the medium-term outlook is improving, prudent decision-making based on evolving economic indicators is necessary for sustained growth.
NationPress
6 May 2026
Frequently Asked Questions
What is the recommended equity allocation for aggressive investors?
Investors are advised to consider a 60-65% equity allocation as the medium-term risk-reward dynamics improve.
What should conservative investors focus on?
Conservative investors should maintain a higher fixed-income exposure along with a tactical cash buffer of about 5%.
Which sectors are expected to perform well?
Sectors aligned with infrastructure, defense, logistics, capital goods, and select manufacturing themes are expected to remain well-supported.
What are the global factors affecting the market?
Global uncertainties, currency fluctuations, and earnings recalibrations are influencing short-term market sentiment.
How should investors position themselves?
Investor positioning should adapt to domestic policy signals and favor companies with strong balance sheets and sustainable earnings visibility.
