The “Santa Rally” is Here: Nifty at 26,000, Gold at ₹1.34 Lakh – What Should You Do Now?
If you have looked at your portfolio in the last week, you are likely smiling. The markets are in high spirits, and the “Year-End Rally” seems to be officially underway.
But with Gold hitting a record ₹1.34 Lakh and the Nifty reclaiming the 26,000 mark, a lot of investors are asking us the same question: “Is this a bubble, or is this the new normal?”
Here is our breakdown of what is happening in the Indian market right now—and how you should position your money for 2026.
1. The “Double Engine” Bull Run
Usually, when stocks go up, gold goes down (and vice-versa). But 2025 has broken that rule.
- Equities are up because the Indian economy has officially surpassed Japan to become the world’s 4th largest.
- Gold is up because of global geopolitical tension and rate cuts in the US.
- The Result: If you stayed diversified (Asset Allocation), you are winning on both fronts.
2. The FIIs Are Back
For most of 2025, Foreign Institutional Investors (FIIs) were selling Indian stocks. But in December, the tide turned. With the US Federal Reserve signaling more rate cuts for 2026, foreign money is flooding back into emerging markets like India.
- What this means: Large Cap stocks (Banks, IT, and Infra) usually benefit the most when FIIs buy.
3. Sector Watch: The Leaders & Laggards
- 🚀 The Leaders:
- IT & AI: After a dull 2024, IT stocks are roaring back, driven by AI deal wins.
- Green Energy: With the government’s 500GW target drawing closer, power stocks remain hot.
- 🐢 The Laggards:
- Consumption: Inflation has hurt the “mass market” consumer. Companies selling premium goods are doing well, but entry-level products are struggling.
4. The Warning Sign: Valuation
The Nifty is currently trading at a Price-to-Earnings (PE) ratio of over 22x. This is expensive. While the mood is euphoric, history tells us that markets often correct after a sharp run-up. The “Small Cap” frenzy we saw earlier this year has cooled down—and that is healthy.
Conclusion:
- Don’t Stop SIPs: The market is high, but stopping your SIPs now is a mistake. You will miss the compounding.
- Review Your Asset Allocation: If your Equity allocation has jumped (e.g., from 60% to 75%) because of the rally, it might be time to rebalance. Book some profits and move them to Debt or Gold.
- Stick to Quality: In an expensive market, “junk stocks” fall the hardest. Stick to Flexi-Cap and Multi-Cap funds that hold high-quality companies.
The Bottom Line: Enjoy the green in your portfolio, but don’t let greed take the wheel. 2025 was a year of growth; let’s make 2026 a year of consolidation.
Have you rebalanced your portfolio this year? Reply to this message, and let’s review your holdings before the New Year.