Daily Voice: Froth builds up in precious metals valuations; time to book some profits, says Equirus Family Office CIO

Chanchal Agarwal is the CIO at Equirus Family Office

• Demand is coming back across categories as GST cuts have catalysed consumption, said Chanchal Agarwal.

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Chanchal Agarwal, chief investment officer at Equirus Family Office, believes that there is significant froth and noise building up in precious metals valuations. “I would book some profits from last year,” she said in an interview with Moneycontrol.

According to her, in every gold rush, the real winners were not just the miners, but those selling the picks and shovels. Today, the AI revolution represents the new gold rush, with data centers serving as the picks and shovels powering it. She believes that India is uniquely positioned to become the backbone of this race.

Do you strongly expect the Q3FY26 earnings season to bring positivity to Dalal Street, considering that earnings cuts are behind us?

With expansionary Fiscal and Monetary policies, India could see acceleration in nominal GDP growth, which is one critical item for corporate earnings growth. Aiding earnings further is the sense that on the ground, demand is coming back across categories as GST cuts have catalysed consumption.

What is your preference for 2026: large-cap and small-cap over mid-cap, large-cap and mid-cap over small-cap, or large-cap over mid-cap and small-cap?

Large companies retained market share gains in 1HFY26, and small companies turned profitable for the first time in 14 years. PAT of listed companies stayed high in 1HFY26. As in the previous six quarters, mid-caps continued to lead on EBITDA growth, led by cyclicals and rate-sensitive sectors, while large caps lagged, weighed down by discretionary and utilities.

We prefer increasing bets to quality active asset managers in the portfolio over momentum tracking themes.

Are you confident that the equity market can deliver a 10-15 percent return in 2026 despite volatility?

Most global investors are underweight EMs, and future flows will be driven by whether the EM outperformance continues or over-reliance on US equities for returns.

If money comes back to EMs, India, too, will get its fair share as the underweight will not likely increase. In fact, India could be the biggest beneficiary of any cooling of sentiment towards AI.

In every gold rush, the real winners weren’t just the miners they were the ones selling picks and shovels. Today, the AI revolution is the new gold rush, and data centers are the picks and shovels powering it. India is uniquely positioned to become the backbone of this race.

Do you expect the strong upside momentum in gold and silver to continue in 2026?

The phenomenal rise is attributed to massive Central Bankers buying. As per a report from Goldman, China secretly buying up massive amounts of gold, 10x more than officially reported.

On a relative basis to other precious metals like silver, gold-to-silver ratio tends to reach major lows roughly every five years, with the next one expected in the first half of 2026; which means by 2026, gold will be overvalued when compared to historic basis Vs silver.

Now if this has to mean revert, either Gold corrects or we see a massive Silver rally (which is what is presently happening). I see a lot of froth and noise build up on the precious metals valuations and would take back home and book some profits from last year.

Is another round of interest rate cut expected in upcoming policy meetings?

Inflation in India has fallen sharply this year. While part of this reflects softer food prices, which are inherently volatile, sans that as well the underlying inflation has remained well contained. In fact, the RBI has noted that true core inflation may be even lower once the impact of higher precious metal prices is stripped out.

Tighter monetary conditions late last year and early this year also played a role in cooling activity. That phase has now turned. The RBI has shifted toward easier policy through rate cuts, improved liquidity, and regulatory easing. While recent FX intervention has temporarily drained liquidity, the RBI is actively offsetting this to keep financial conditions supportive. The impact of this easing should show up with a lag, helping nominal growth recover.

A mix of a moderately weaker currency and lower-for-longer interest rates may be the most effective policy combination. This outcome, however, depends on a supportive external backdrop. USD needs to remain broadly stable rather than enter another phase of sharp strength, which would once again restrict policy flexibility for emerging markets.

We think RBI will be able to keep policy rates lower for longer. The curve steepens till 3-4 years and then flattens post that, we prefer the ~4-5 years of duration.