Gold or stocks: Which asset class will make you happier by next Diwali? Explained

The big question for investors on Diwali is what asset class should they bet on - gold or stocks? Gold and silver prices have been hitting new lifetime highs this year, and equities after a period of selloff and volatility seem to have stabilized.From last Diwali to now, Gold has surged 64%, silver 85%, while Nifty 50 delivered only 6.5%, making it a clear win for precious metals. But how will Samvat 2082 pan out for equities, gold and silver? Will gold and silver continue to outperform Indian equity benchmark indices Nifty50 and BSE Sensex? Which asset class will make you happier by Diwali 2026 and what should your investment strategy look like? We ask experts:

How have stock markets and gold performed since last Diwali?

Last year on Diwali (October 31), Nifty50 closed at 24205.35.

Come 2025, Nifty50 has closed at 25,843.15 - that’s a return of 6.7% from Diwali to Diwali.Abhilash Koikkara, EVP & Head- Forex and Commodities, Nuvama Professional Clients Group notes that from last Diwali to now, Indian equities have delivered a moderate return.

“There have been substantial capital outflows from overseas investors of nearly $15 billion on a year-to-date basis amid tariff uncertainty between India and the US.

At the same time, global equities are at record high with an average 20% to 30% return in the last 12 months,” he tells TOI.Meanwhile, gold rallied over 50%, outperforming equities during periods of global fear, especially after rising geopolitical tensions, sticky US inflation, and global central banks easing on rates along with consistent buying of yellow metals.Gold’s performance was also amplified in India due to rupee depreciation, which moved from 84.04/$ to near 88.80/$ in the past 12 months, adding currency gains on top of global gold prices.

Central bank purchases - led by China, Turkey, and India created demand resilience even without taking support from ETF inflows, he added.

Diwali 2025 to Diwali 2026: Stocks or gold - what should you bet on?

Investors are faced with a dilemma - should they opt for gold and silver over equities and risk the precious metals’ rally running out? Or will the tepid performance of the Indian equity markets continue?Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services is of the view that money flow has definitely shifted from riskier to safe haven assets amidst the volatility. “On a YoY basis, precious metals stand out in terms of the overall gain; however, diversification is the key in any investments hence, along with Gold and Silver, other assets should also be part of the portfolio based on investors risk profile and tenure of investment,” he tells TOI.Importantly, it doesn’t have to be an either or situation. Portfolio diversification is key and putting all eggs in one basket has never been a wise choice.Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities says , “If economic uncertainty, de-dollarisation, and safe-haven demand continue to dominate, gold may rise 15–20% and silver 30–50%, extending their current bull run.”However, Trivedi cautions that on the flip side, going into the next Samvat, equities could stage a strong comeback if the US stabilizes tariffs with India, India’s earnings momentum holds, and FII inflows revive.

“In such a case, the Nifty could rally 12–18%, potentially outpacing gold, especially if geopolitical risks ease and the dollar strengthens,” he tells TOI.“In essence, precious metals remain a hedge, while equities offer growth. Investors should diversify — keep 15–25% in gold, 10–15% in silver, around 25% in bullions, and the rest in equities to balance risk and reward in the year ahead,” he adds.Chethan Shenoy, Executive Director & Head - Product & Research, Anand Rathi Wealth Limited cautions that while gold and silver have rallied well, investors should remember that these metals move largely on global demand-supply dynamics, currency trends, and geopolitical events rather than on economic or earnings fundamentals.

“Their strong rally this year has been driven more by global uncertainty and a weaker dollar than by sustainable growth triggers,” he says.“Looking ahead to the next Diwali in 2026, the investment landscape appears to favor equities over precious metals. India’s economy continues to show remarkable resilience. GDP grew 7.8% in the quarter ended June 2025, led by robust manufacturing, services, and construction.

The RBI expects FY26 growth at 6.8%, with retail inflation easing to 1.54% in September 2025, well below the 4% target. This combination of strong growth and low inflation creates an ideal environment for equities to outperform,” he tells TOI.Chethan Shenoy explains that historically, the Nifty has delivered over 12% annualized returns across 3, 5, and 10-year periods, significantly higher than gold’s long-term average of around 7 to 8%. “Gold’s appeal lies in diversification and risk management, not wealth creation. It works better as a stabilizer within the debt portion of a portfolio rather than as a substitute for equities. In summary, gold and silver are best used for diversifying a portfolio and providing a defensive cushion in place of debt. They may offer attractive returns in the short run, but equities remain the more consistent and reliable path for long-term wealth creation,” he concludes.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)