‘Don't Expect 20% Returns Anymore’: Nilesh Shah’s Big Reality Check for Investors

India's markets may be resilient, but investors need a serious reset in expectations, says Kotak Mahindra AMC Managing Director Nilesh Shah in an exclusive interview with Republic Media Network.
In a candid conversation, Shah urged investors to moderate their return expectations going forward. "Unlike the last five years where the broad market delivered 16-18% returns—and small and mid-caps soared over 20%—those days are unlikely to repeat," he warned.

According to Shah, India’s stock valuations are now “fairly priced” and the market has already seen a re-rating. "Further re-rating looks difficult. So now, market returns will be linked to earnings growth, which is expected to stay in the low double digits or high single digits," he said.

Know Your Risk DNA

Shah also stressed understanding one's risk appetite before making investment decisions.

"If you bought during COVID and stayed invested, you’re an aggressive investor. You can afford to allocate nearly 100% of your ₹50 lakh in risk assets like equities, gold, or real estate." But for conservative investors who panic-sold during market dips, he advised caution: “Keep only 30–40% in risk assets. The rest should be in safer instruments.”

For the average investor—someone who continued their SIPs without making any major portfolio changes—Shah suggests a balanced 60:40 allocation between risk and non-risk assets.

Shah’s Smart Allocation Playbook

On current investment strategy, Shah believes equities are “fairly valued” and calls for a neutral stance. "Overweight large caps slightly; go underweight on small and mid-caps due to stretched valuations," he advised.
He also sounded bullish on gold, citing sustained buying by global central banks. On the debt side, he recommended exploring performing credit AIFs that can offer higher yields. “Overweight gold, overweight performing credit, and overweight large caps within a neutral equity outlook,” Shah concluded.

Also Read: Which Sectors Will Lead Next Stock Market Rally? Nilesh Shah Answers