Stocks under pressure, gold shines: why a portfolio review is critical now – Views on Equitymaster news

February 6, 2026

The markets were busy. Very busy.

Budgets have been announced, the global trade equations have shifted, gold and silver have soared, and stock markets have swung sharply between fear and relief.

And yet, when many investors open their portfolio summaries today, the feeling is the same: “So much has happened… but returns are still disappointing.”

This disconnect between market activity and portfolio performance is not coincidental. It’s the clearest signal yet that many portfolios are simply not aligned with current realities.

And that’s exactly why a portfolio review has shifted from optional to essential.

The hard truth: The past year has not been kind to Indian equity investors

Let’s start with an uncomfortable fact.

Despite periodic rallies, the past year has not been a rewarding one for Indian equities when viewed through a portfolio lens rather than the major indices.

Yes, indices flirted with highs. Yes, certain stocks performed well. But for the average investor, returns have been uneven, volatility has been high, and declines have come faster than recoveries.

Large parts of the mid- and small-cap universe corrected sharply after years of excesses. Earnings could not justify valuations. Liquidity dried up at the first signs of global stress.

Simply put, stock returns have been noisy, fragile and frustrating.

Now compare this with what happened elsewhere.

Gold and Silver: Silent, unloved and exceptionally rewarding

As stock investors debated valuations and waited for the next rally, gold and silver rose steadily.

Over the past year, gold has delivered strong double-digit returns, while silver rose even sharper with returns of over 190%, helped by both safe-haven demand and industrial use.

This was not speculation. It was classic cycling behavior:

– Increasing geopolitical risk

– Currency uncertainty

– Central banks accumulate gold

– Investors seeking protection against stock volatility

And yet most portfolios had little to no investments in precious metals.

Why?

Diversification is easy to preach in bad times and easy to forget in good times.

A portfolio review would have identified this imbalance at an early stage. Without one, investors unknowingly bet everything on stocks and paid the price.

Budget 2026: Not a disaster, but a reality check

The Union Budget acted as the first stress test of investors’ expectations. Although it was budget-wise, it lacked direct cause for equity enthusiasm.

More importantly, a sharp increase in the Securities Transaction Tax (STT) on derivatives was introduced, which had deeper consequences than most investors realized.

This move:

– Significantly increased transaction costs

– Influenced arbitrage, hybrid and active trading strategies

– Muted liquidity expectations

The markets reacted quickly and negatively, not because the budget was bad, but because cost structures changed. For portfolios exposed to arbitrage funds, tactical allocation strategies and high portfolio turnover, the impact was immediate.

This is exactly why portfolio reviews are important. Not all risks emerge when headlines crash. Some manifest as structural return compression.

Trump’s Tariff Swings: A Global Risk Investors Have Underestimated

Donald Trump’s renewed rhetoric around tariffs on Indian exports, accusations of trade imbalance and unpredictable policy tone roiled markets last year.

Indian stocks, already on shaky footing, reacted poorly.

What scared investors was not just the possibility of tariffs, but also the uncertainty:

– Will tariffs actually be imposed?

– In which sectors?

– For how long?

– Under what political logic?

Markets hate ambiguity more than bad news. Capital flows slowed. The risk appetite shrank. Shares have been sold again.

For investors who lean heavily toward stocks, there was no place to hide.

Why the India-US trade deal changed the mood

Then came relief.

Recent progress on a trade deal between India and the US helped allay fears. The markets recovered, not euphorically, but decisively.

This rebound was important because it reduced worst-case rate scenarios, reassured foreign investors and stabilized global risk perceptions.

But here’s the key point: this was a recovery in sentiment, not a broad-based earnings-driven rally.

Only selected stocks and sectors participated. Many portfolios did not.

Again, the problem was not the market, but the positioning.

Why so many portfolios delivered ‘dampened’ returns

At this point the pattern should be clear…

– The stock markets struggled with consistency

– Gold and silver performed strongly

– Global risks surfaced repeatedly

– Costs rose

– Leadership rotated

Yet the portfolios remained static.

This is because most investors hold the following:

– Funds selected years ago for a different cycle

– Overlapping equity strategies that are mistaken for diversification

– No meaningful allocation to defensive or alternative assets

So even when opportunities arose, the portfolio simply wasn’t built to take them. This is why returns feel subdued, not because nothing has happened, but because the portfolio has not evolved.

Equality is still essential, but only if it is viewed carefully

This is not an argument against stocks. Equities remain the most important long-term wealth creator. But equality without testing becomes directionless exposure.

Market cycles change:

– What worked in a liquidity-driven, low-interest rate environment will not automatically work as costs rise and global risks dominate.

– Fund managers are losing their edge.

– Styles fall out of favor.

A portfolio assessment is not about giving up equity. It’s about refining it.

What a portfolio assessment should achieve

A good review should answer these uncomfortable questions:

– Is my asset allocation still relevant or just known?

– Has my portfolio benefited from gold and silver, or missed them completely?

– Are my equity funds aligned with the current risk-return reality?

– Am I paying hidden costs due to inefficiency and slowness?

– What changes would improve resilience, and not just returns?

This is not churn. It’s course correction.

In conclusion

Markets will continue to change. Ignoring that is a choice.

The past year has taught investors an important lesson: markets no longer move in straight lines.

Stocks struggled. Gold and silver shone. Global politics intervened. Costs rose. The sentiment changed again and again.

In such an environment, it is not conservative not to review your portfolio. It’s complacent. A portfolio assessment does not guarantee higher returns. But it dramatically increases your chances of staying relevant.

And in markets like these, relevance is everything.