Domestic capital markets have faced a period of relative underperformance compared to global peers, leading Motilal Oswal Private Wealth to maintain a neutral outlook on Indian equities. This cautious market reaction is primarily driven by geopolitical uncertainty stemming from the Middle East conflict, elevated crude prices, and a visible slowdown in earnings momentum.Despite these pressures, the broader domestic macroeconomic backdrop remains resilient, with mid and small caps demonstrating significant strength by outperforming large caps since the start of the recent geopolitical tensions. Consequently, the firm has maintained an overweight stance on the mid and small cap segment to capture this relative resilience.In its latest Alpha Strategist report for May 2026, the brokerage suggested a structured portfolio allocation consisting of 50 per cent in hybrid or large caps, 40 per cent in mid and small caps, and 10 per cent in global exposure. The firm maintained a neutral view on the broader equity market but recommends a staggered approach for pure equity-oriented strategies. Within the fixed income space, the brokerage believes interest rates will remain elevated for longer, advising cash-flow focused accrual strategies as global inflation risks resurface.Further, it maintained a neutral allocation stance on gold and silver with more weight towards gold, supported by continued central bank buying and easing speculative excess in global gold markets.“Global markets in 2026 are increasingly being shaped by AI-led earnings and infrastructure cycle, with technology heavy economies such as South Korea and Taiwan leading the upcycle, while India continues to demonstrate resilience through its strong domestic macroeconomic fundamentals,” said Ashish Shanker, MD & CEO, Motilal Oswal Private Wealth. He added that record GST collections and signs of rural recovery are key pillars of the domestic investment-led growth story.Sandipan Roy, Chief Investment Officer at Motilal Oswal Private Wealth, further noted: “Despite the global uncertainties and FII apathy towards Indian markets, the resilience in India’s macroeconomic fundamentals, stable growth outlook, and strengthening corporate balance sheets continue to support a constructive long-term investment outlook. In the current environment, investors should focus on disciplined asset allocation and gradual portfolio building rather than reacting to short-term market volatility.”Published on May 29, 2026