Summary of this article
Gold prices have corrected nearly Rs 40,000 from their record high
Experts see opportunities in equities as corporate earnings recover
Experts recommend keeping 10-15 per cent portfolio allocation in gold
Gold prices have corrected nearly Rs 40,000, and the Nifty 50 has declined over 11 per cent so far this year. With both asset classes trading below their recent highs, investors face a key question this Dhanteras: should they use the correction to buy gold or invest in equity mutual funds amid a recovery in corporate earnings?
Gold has traditionally been a popular Dhanteras investment, but the correction in equities has also made stock market investments worth considering. The choice between the two will depend on an investor's risk appetite, investment horizon and existing portfolio allocation.
With gold and equities both witnessing a correction, investors are weighing their options this Dhanteras. Should they buy gold at lower levels or turn to equity mutual funds? And what should investors with a three-to-five-year investment horizon consider before making a decision?
Equity Mutual Funds Offer Better Risk-Reward After Market Correction
The correction in equities has brought valuations to more reasonable levels, amid signs of recovery in corporate earnings.
Akshat Garg, head of research and product at Choice Wealth, said, "At current levels, equities offer the more favourable risk-reward. The Nifty 50 is down nearly 11 per cent year-to-date, yet Q2 FY27 corporate earnings are reviving sharply — Nifty profit growth is estimated at 20–27 per cent year-on-year, the strongest in over three years — led by banks, autos, metals and oil marketers."
He believes the combination of lower stock prices and improving earnings could create opportunities for long-term investors.
"That combination of a price correction and an earnings re-acceleration is improving valuations and creating attractive entry points for three-to-five-year investors, best captured through equity mutual funds and SIPs," Garg said.
For investors who do not want to take direct exposure to individual stocks, equity mutual funds offer a diversified route to participate in a potential market recovery. Systematic Investment Plans (SIPs) can also help spread investments across different market levels instead of committing a large amount at once.
Aakansha Shukla, assistant vice president of wealth management at Master Capital Services, also believes equity mutual funds offer a better risk-reward opportunity at current levels.
"With Nifty 50 down over 10 per cent this year, some of the froth in valuations has already gone and buying after such correction has usually paid off for investors who can stay put for three to five years," she said.
However, investors should not interpret the market correction as a signal to take aggressive exposure to every segment of the market.
Shukla favours flexi-cap and large-cap funds over mid-cap and small-cap schemes in the current market environment.
"The sensible approach is to keep gold at around 10-15% of the portfolio and put fresh money into equity funds gradually through SIPs or STPs over 6 to 9 months. Flexi-cap and large-cap funds suit this phase better than mid and small caps since the downside is more cushioned," she said.
Gold Prices Down Rs 40,000: Is This Dhanteras A Buying Opportunity
Following a historic rally, gold prices have corrected nearly Rs 40,000, or around 22 per cent, from their record high of Rs 1,80,779 per 10 grams, touched on January 29, 2026. The fall may tempt investors to increase their allocation to the yellow metal this Dhanteras.
However, experts caution against treating the correction as an automatic buying opportunity. Gold prices are influenced by several factors, including the US dollar, bond yields, currency movements and geopolitical developments.
Shukla said, "Gold’s fall of nearly Rs 40,000 looks big, but it comes after a rally of over 70 per cent in 2025, so prices are still well above where they were 2 years ago. Its next move depends on the dollar, US yields and the rupee and none of these is easy to call."
She added that a further decline in gold prices cannot be ruled out, making it more suitable as a portfolio hedge than an asset to chase after a correction.
Garg also believes gold should retain its place in an investor's portfolio, but fresh investments need not necessarily go towards the yellow metal.
"Gold remains a vital hedge against geopolitical and currency risk, but as a largely demand-supply and safe-haven driven asset, it is a diversifier — not a core wealth-compounder," he said.
Gold Or Equity Mutual Funds: How Should Investors Allocate Money This Dhanteras
Investors need not choose between gold and equities entirely. The two assets serve different purposes in a portfolio. Gold can help cushion losses during periods of uncertainty, while equities offer the potential for long-term capital appreciation through earnings growth.
Both experts recommend maintaining a gold allocation of around 10-15 per cent of the overall portfolio and directing a larger share of fresh investments towards equities.
Garg said, "We would hold 10–15 per cent in gold and deploy fresh money into quality equities."
Shukla also believes investors should use SIPs to enter equity markets rather than invest their entire surplus at once.
"Gold hedges the portfolio while equities are where the next leg of returns is more likely to come from," she said.
Investors with little or no gold exposure can consider building a measured allocation, while investors already holding substantial gold may find better opportunities in equity mutual funds.
Investors should also remember that a market correction does not guarantee an immediate recovery. Equity investments carry market risk and are better suited to those who can remain invested through volatility.
For investors looking to stay invested for three to five years, equity mutual funds may be worth considering this Dhanteras, while gold can continue to provide balance and protection to their portfolios.
