• Market volatility outlook: Market corrections of 10% to 12% represent normal yearly peak-to-trough movements rather than dramatic crashes, and benchmark levels could retrace past peaks of 26,350 once war tensions settle, with crude oil averaging around $85.
• Small-cap earnings dynamics: While headline NSE Smallcap 250 earnings appeared to degrow by 9% due to 67 constituent changes, constant constituent earnings actually grew by 9%, supported by an estimated 6,300 crore rupees flowing into mid- and small-cap funds.
• Portfolio allocation strategy: Investors are advised to allocate 60% of their portfolio to large caps and 20% each to midcaps and small caps, ensuring broader market exposure does not exceed 50%.
• Gold return outlook: Caution is warranted on gold after sharp price run-ups driven by recency bias, with expected rolling dollar returns realistically capped around 8% to 9% rather than astronomical figures.