BIG FLAMES DIE OUT FASTER: INVESTING LESSONS FOR 2026

In 1912, the Titanic sailed with supreme confidence.

- KALPEN PAREKH

Branded unsinkable, that certainty shaped a series of poor decisions—too few lifeboats, higher speeds and ignored warnings. The ship didn’t sink because the iceberg was too large, but because those steering it were too sure. That lesson stayed with me while reviewing markets, asset-class returns and the economy in 2025.Though India’s long-term story remains intact—growth is healthy and corporate balance sheets are at their strongest in decades—2025 delivered a reminder—when confidence turns into certainty about above-average growth, respect for valuation risk fades. And when risk is ignored, markets respond with ordinary cyclical outcomes and lower returns.

Growth is slowing: India continues to post solid real growth. FY25 came in at 6.5%, while FY26 has been stronger so far, with 8.2% real GDP growth in Q2 and 8.0% in the first half. But a deeper look matters.

Nominal GDP—the driver of company revenues, taxes and earnings—has slowed. It was 9.8% in FY25, and the FY26 Budget assumes 10.1%. That’s a sharp contrast to the 2000s, when nominal growth often reached 12-14%. Today’s reality is an 8-10% band—a healthy number, especially compared with much lower growth globally.