A Unusual Market Phenomenon in India
India is currently experiencing a rare situation where both gold and stock markets are rising simultaneously, leading to excitement among gold enthusiasts and stock market bulls alike, while leaving asset managers perplexed. The Sensex and Nifty indices have surged over 8% within just seven trading sessions. In comparison, gold has skyrocketed by an astonishing 27% in 2025, exceeding Rs 1 lakh per 10 grams in India and crossing the $3500 per ounce mark in London’s bullion market. If your asset allocation strategy seems to have unraveled, you’re definitely not the only one.
Breaking Tradition: A Shift in Market Dynamics
This unusual correlation between normally opposing assets has left even seasoned market veterans in disbelief. The fundamental causes include a weakening US dollar, rising trade tensions, an increasing tendency among central banks to stockpile gold as a security measure, and a global rush for hedging against uncertainty. Consequently, the conventional inverse relationship between equities and gold has vanished swiftly, akin to ice cream melting in Mumbai’s heat.
Gold’s Strong Performance and Future Outlook
According to Sandip Raichura from Prabhudas Lilladher, “Gold has surged over 30% this year, and while such rallies may experience occasional corrections, it appears to be on a continued bullish trend as both governments and investors diversify away from US treasuries, suggesting much higher levels could be forthcoming in the next 12 months.” However, as portfolios swell, asset allocation strategies are collapsing.
Social Media Buzz Around Investment Strategies
Social media is buzzing with memes portraying housewives-turned-gold investors outsmarting seasoned professionals. Veteran banker Uday Kotak acknowledged this, stating on X that “the Indian housewife is the smartest fund manager in the world.” So, how should investors navigate this market where both assets are on the rise?
Investing Advice Amid Rising Markets
Siddharth Srivastava, ETF head at Mirae Asset, suggests that investors should maintain a focus on long-term asset allocation. He advises investing in both gold and equities but recommends doing so gradually and cautions against chasing short-term gains. “While the macro forces aiding gold’s rise persist, it’s wise to also consider profit booking as gold has rallied sharply already,” he noted.
Is It Too Late to Invest in Gold?
For those hesitant about entering the gold market now or worried about missing the rally, Om Ghawalkar, a market analyst, recommends avoiding lump-sum investments. Instead, adopting a systematic investment plan (SIP) in gold ETFs can help average purchase prices and mitigate short-term volatility. He also emphasizes being cautious with overall exposure, suggesting that gold should not exceed 10% of a portfolio unless there are specific reasons, such as hedging against geopolitical risks.
Final Thoughts from Market Experts
For investors fortunate enough to have substantial profits, Ghawalkar advises trimming holdings if gold positions exceed 20-25% of the portfolio. This strategy allows for locking in some gains while still retaining reasonable exposure. It’s essential to note that the surge in equities is not unfounded; strong Q4 earnings, especially in banking and automotive sectors, along with robust foreign portfolio investments, substantiate current market optimism.
Key Investment Rules in this Dual Rally
- Trim Excess Holdings: If gold has become a dominant part of your portfolio, it’s time to reduce that exposure.
- SIP Your Investments: Stagger your investments in both gold and equities to better manage risk.
- Maintain Diversification: Avoid chasing returns; a balanced portfolio remains your best safeguard.
In a scenario where stocks and gold rise in tandem, maintaining composure with a clear investment strategy is paramount—perhaps even taking cues from the instinct of the savvy Indian housewife.
(Disclaimer: The recommendations and opinions provided by experts are theirs alone and do not reflect the views of The Economic Times.)
