Secure Investments

Mr. Rahul Pal

Chief Investment Officer - Fixed Income, Mahindra Manulife Mutual Fund

Mr. Rahul Pal is a Chartered Accountant. Prior to joining Mahindra Manulife Investment Management Private Limited, he was associated with Taurus Asset Management Company Limited as 'CIO - Fixed Income'. He has also worked with Sundaram Asset Management Company Limited as 'Fund Manager - Fixed Income'. In these roles, he was responsible for managing and overseeing the Fixed Income Portfolios.

Please note we have published the answers as it is received from the Fund Manager of Mahindra Manulife Mutual Fund.

Q1. The U.S. Federal Reserve recently cut rates by 25 bps, while the RBI chose to hold its policy rate steady at 5.5%. How do you interpret this policy divergence, and what implications does it have for capital flows, yield differentials, and the broader Indian debt markets?

Ans: The U.S. Federal Reserve's recent 25 bps rate cut, bringing the federal funds rate to 4.00-4.25%, marks a pivot toward accommodative policy amidst a softening labour market and political uncertainty due to the government shutdown. The RBI though held its repo rate steady at 5.5%, citing robust GDP growth (7.8% in Q1 FY26), benign inflation (1.54% in September), and maintained neutral stance. 

This divergence reflects idiosyncratic domestic macro conditions:

• Fed's cut aims to pre-empt labour market deterioration, support growth amidst fiscal challenges

• RBI's pause signals confidence in India's growth trajectory and inflation containment, while presenting itself space for further policy accommodation.

Implications:

• Capital Flows: A narrowing India-U.S. yield differential (now ~200-225 bps) reduces the relative attractiveness of Indian debt for foreign investors. This has already triggered FPI outflows from Indian bonds, particularly Fully Accessible Route (FAR) securities. 

• Currency Pressure: Reduced inflows may exert mild depreciation pressure on the INR, though India's FX reserves and trade resilience offer buffers.

• Impact Domestic Debt Markets: The RBI's pause supports stability in short-term yields, while long-end yields may remain sticky due to global volatility and possible elevated commodity price pressure .However there have been recent news on possible challenges in US Credit market and should it have a contagion , the rush to safe heaven (possibly US treasuries) may trigger a likely RBI action.

Q2. With the Fed's rate cut signaling a potential shift in the global interest rate cycle, do you expect the RBI to follow suit in the coming quarters?

Ans: While the Fed's pivot suggests a global easing cycle, the RBI remains cautious. Its October policy emphasized domestic resilience, low inflation, and the need to allow full transmission of earlier rate cuts.

While a low benign inflation does open space for a possible rate action by the Monetary Policy Committee (MPC) of the RBI, we believe global risk off trades, should they materialize, may prompt the MPC for deeper cuts.

Q3. The RBI has revised its inflation projection for FY26 downward to 2.6% from 3.1%. How do you view this assessment - is the inflation trajectory comfortably within control, or are there still risks that could emerge?

Ans: The RBI's downward revision from 3.1% to 2.6% for FY26 reflects confidence in food price moderation, GST rationalisation, supply-side improvements, adequate rainfalls

Supportive Factors:

• Record agricultural output and buffer stocks.

• Negative food inflation in rural areas.

• Core inflation largely contained, barring precious metals. 

Risks to Watch:

• Hard Commodities already inching up

• Sticky services inflation and gold-driven core CPI.

• Tariff-related supply chain disruptions.

• A low food inflation may possibly mean lower incomes for Agriculture dependent households prompting a possible fiscal support to such households

Q4. Retail participation in debt mutual funds has been gradually rising again post-taxation changes. Are investors leaning towards short-term safety or long-term accrual strategies?

Ans: We believe debt mutual funds offer offers a diversification choice in terms of asset allocation, competitive returns vis traditional fixed income products and easy liquidity.

Investors, predominantly, are investing in debt mutual funds for various reasons: a volatile equity market resulting in a vehicle for temporary investments, as an asset diversifier and returns possibly higher than traditional fixed income products.

Q5. What are the key risk indicators you are monitoring for Indian debt markets over the next 6-12 months, and how resilient do you expect the market to be against potential shocks such as a sudden global rate spike or US Treasury yield volatility?

Ans: The key risk indicators for Indian Debt markets 

1. The low inflation regime is predominantly due to low food inflation; Food inflation is a very difficult factor to forecast and the margin for errors may be large. As food inflation is almost 45% of the CPI basket, assuming a secularity in food inflation is a key risk marker.

2. Hard Commodities, copper and aluminum have been inching up, which may risk inflation on the higher side

3. Geo Political conditions, if they ease , may surprisingly also bring up inflation as war ravaged zones of Middle East and Ukraine bring about reconstruction efforts and possibly a commodity price pressure

4. While there are initial narratives on credit challenges in US, these challenges will be a one of the key markers

Q6. In this environment of global rate adjustments, currency pressure, and moderating inflation, what would be your preferred strategy for positioning debt portfolios - duration play, accrual focus, or a balanced approach?

Ans: We believe a balanced approach is a desirable option with a possible 60% focused towards accrual and the rest towards a duration focus.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

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Ms. Fatema Pacha

Fund Manager - Equity, Mahindra Manulife Mutual Fund

Ms. Fatema Pacha has over 19 years of work experience of which around 15 years have been in the field of equity research and fund management. Prior to joining MMIMPL, she was associated with ICICI Prudential Life Insurance and UTI Mutual Fund. She holds a PGDBM (Finance) from SP Jain Institute of Management & Research, Mumbai and a BE (Computers) from Thadomal Shahani Engineering College, Mumbai.

Please note we have published the answers as it is received from the Fund Manager of MAHINDRA MANULIFE Mutual Fund.

Q1. The year 2025 has been quite challenging for Indian equities, while commodities like gold and silver have outperformed. Given this divergence, how do you assess the current market structure and valuation trends within the Sensex and Nifty?

Ans: We have to always remember the 15% CAGR return rule that Indian equities have delivered over longer periods of time. There tends to be excesses on the top and bottom and that ensures period of time and price correction.

If we compare valuations for Nifty/Sensex the earnings rollover has made Nifty cheaper and it now trades at 20x FY27. Also, last year the valuation gap between India & the world was quite high. However, in the last 12 months with India under performing Emerging Markets our valuations have converged even versus the region making it attractive for global investors.

Gold & Silver have given stellar returns and many investors feel they have missed the rally. However, we would like to remind that generally peak and bottom is formed on greed and fear and investors have to be extremely mindful about asset allocations.

Q2. We've seen a surge in IPO activity this year. How do you assess current market valuations, and do you believe the post-listing performance of new issues is sustainable?

Ans: Around 80 companies have raised around $14 billion, nearly Rs 1.17 lakh crore in 2025 so far, compared to 91 companies that mobilized Rs 1.59 lakh crore in 2024. The numbers still look large, but both in terms of count and size, there seems to be moderation, even as the retail frenzy around IPOs remains visibly high.

There is a strong pipeline of upcoming IPOs with over 200 companies and an estimated issue size of about Rs 2.9 lakh crore. Instead of growth-driven issuances, a larger portion of new capital is being channeled toward debt repayment, promoter exits, and general corporate purposes.

CY25TD have seen 15% of IPOs sustain > 25% listing gains and 31% IPOs are below IPO price. Clearly shows the divergence between subscription frenzy and post-listing returns.

Q3. Corporate earnings have been muted in recent quarters. With the government's fiscal push and GST-related gains, when do you expect to see these factors translating into improved corporate balance sheets?

Ans: Corporate earnings have been muted last year in H2 and has had some impact in Q1 as well. However, Q2 earnings growth is seeing improvement and we believe FY26 can report 8-9% Nifty EPS growth. FY27 earnings growth estimates are yet strong at 14-15%. Short term GST transition issues aside, we believe the Income tax cut of the budget and the GST rate cut will lead to improved demand conditions translating into improved corporate revenue and profit growth.

Q4. As we enter the festive season, what are your expectations for the equity markets in October? Do you foresee any short-term momentum or sectoral themes playing out?

Ans: Market has been in a time correction mode and we have had significant FII selling in the last 12 months. Incrementally we believe that the US trade deal may be signed soon. Valuations are not as expensive as before and corporate earnings growth has started to improve. We are positive on Financials and Consumption themes.

Q5. What approach would you recommend for long-term investors for the remainder of 2025, given the current market and macroeconomic environment?

Ans: We believe asset allocation remains key for investors in their journey of wealth building . The allocation is applicable to both equity as an asset class as well as choice of market capitalization within equities. From investors perspective, we continue to believe that an aggregate large cap offers better value and margin of safety as compared to micro caps, small caps & mid-caps.

Investors with near-term objectives or low risk appetite can opt to prefer Equity Hybrid Funds or asset allocation funds. Investors with a longer-term horizon can continue to remain invested with fresh equity allocation towards large caps.

Q6. How vulnerable do you think Indian equities are to global macro risks such as rupee depreciation, rising US interest rates, elevated oil prices, and the ongoing US government shutdown concerns?

Ans: Currently we believe the major risk facing the world economy is geopolitical risks from Trump decisions on trade tariffs across all countries. As the resultant impact of the tariffs on the US economy and inflation is unknown. US and global equity markets along with gold & silver have been in a strong momentum phase. So, the major risk for India can be the unwinding of the global risk-on trade. However, considering our markets have gone through consolidation (time correction) in the last 12 months, Indian markets may emerge as a relative outperformer in the event of a global risk off scenario.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

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Mr. Rahul Singh

Chief Investment Officer (CIO) - Equity, TATA Mutual Fund

With over 27 years of investment experience, Mr. Rahul Singh joined Tata Asset Management in October 2018 as CIO-Equities, leading the fund management and equity research teams.

In his previous role at Ampersand Capital Investment Advisors LLP, Mr. Rahul was the Managing Partner. He has also worked with many reputed financial institutions like Standard Chartered Securities and Citigroup Global Markets India as Head of Equity Research.

Mr. Rahul is a Bachelor of Technology in Mechanical Engineering from IIT Bombay and an alumnus of IIM Lucknow where he pursued his Master of Business Administration in Finance and Financial Management Services.

Please note we have published the answers as it is received from the Fund Manager of TATA Mutual Fund.

Q1. India is currently witnessing multiple shifts-AI disruption, the rise of new-age companies, an active IPO pipeline, and changing investor behaviour. How do you see these forces shaping Indian equity markets over the next few years?

Ans: Increased AI adoption and data-center building could extend India's capex cycle (power, transmission, renewables, capital goods), while new-age listings broaden market depth and shift leadership beyond a narrow mega-cap core. Structurally, India's drivers remain intact, investment, credit, real estate, and manufacturing tailwinds, with valuations supported by a still-healthy earnings outlook into FY26. Persistent domestic flows (SIP/DIIs) could help cushion global volatility, keeping India's growth premium versus Emerging Markets (Ems), though this premium has eased in recent times.

Q2. Amid GST reforms, global trade negotiations, and structural changes, which sectors look most attractive to you at this stage?

Ans: Near term beneficiaries from GST 2.0 include FMCG/Staples, small autos & consumer durables, Insurance/Banks (consumption-led credit, insurance at nil GST), Cement/Materials (lower input taxes), and Diagnostics & Hospitals (healthcare spend uplift). Core cyclical exposure remains in Power (demand + grid capex), Select Capital Goods/Manufacturing, and Oil & Gas (where valuations are reasonable). We stay disciplined on valuation in expensive pockets of Industrials/Cap Goods; stock selection and margin trajectories are key.

Q3. Domestic SIP flows have been remarkably consistent. Do you see them providing a strong floor to Indian equities even if FIIs turn sellers?

Ans: Yes, to a meaningful extent. SIP inflows were ₹28,265 cr in August 2025, near peak run rates, even as market breadth softened. Within DIIs, CYTD equity net buying is US$59.3 bn, versus FII outflows US$14.4 bn (Data Source: AMFI Aug'25), indicating domestic savings are still absorbing global risk-off phases. The "floor" isn't absolute, shocks can raise drawdowns, but the structural strength provided by SIPs/DIIs has clearly reduced downside beta versus past cycles. 

Q4. Many investors found the Q1 earnings season below expectations as signs of broad-based growth were missing. Do you think earnings recovery will come in Q2 or Q3 onwards?

Ans: Yes, we expect earnings to gradually improve from Q2 onwards. The recovery should be led by banks (as margins stabilize), power companies (benefiting from strong demand and capex), cement and Oil & Gas (helped by cost trends), and some tech firms. Overall Nifty earnings growth are expected to be decent in FY26. The recovery may not be broad based right away, but we see signs of improvement becoming clearer in the next couple of quarters.

Q5. Fed Chair Jerome Powell has hinted at a possible rate cut next month, which has already lifted sentiment across Asian markets. How meaningful could this development be for India, particularly in terms of foreign fund inflows?

Ans: A 25 bps cut is widely expected, markets are already pricing in easier policy heading into year end. A softer stance by Fed typically pressures DXY lower and reduces global real-rate headwinds, which is a positive for Emerging Market (EM) FX and flows, India included. It is further likely to anchor oil near the mid 60s unless geopolitics flares up. Near term, flows are still likely to toggle on tariff headlines, but the rates backdrop is a net positive for India's risk premia.

Q6. Many investors tend to chase short-term performance and themes. What advice would you give to retail investors looking to build wealth sustainably?

Ans: Stick to a disciplined Core & Satellite strategy: Core large-cap exposure (better risk-reward at current relative valuations) with selective Small & Mid Caps and thematic sleeves where earnings durability is clear. Use SIPs to average cycles, avoid extrapolating hot narratives at stretched multiples (notably where mid/small-cap premiums remain above long-term levels). Focus on GARP and valuation discipline.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

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Mr. Murthy Nagarajan

Head - Fixed Income, TATA Mutual Fund

Mr. Murthy Nagarajan is the Head of Fixed Income at Tata Asset Management. With an expertise spanning decades in the debt market, Murthy brings in a rich and valuable industry experience of more than 25 years in the financial services space.

Prior to his appointment at Tata Asset Management, Mr. Murthy was working with Quantum AMC. He was also associated with Mirae Asset Global Investment India Ltd in the Investment Department as the Head of Fixed Income for more than two years.

Mr. Murthy holds a Master of Commerce degree and has completed his PGDBA from Somaiya Institute of Management & Research.

Please note we have published the answers as it is received from the Fund Manager of TATA Mutual Fund.

Q1. With the U.S. imposing fresh tariffs and global trade tensions intensifying, how have bond yields responded, and what does this imply for fixed income investors?

Ans: Global risk aversion and heavier sovereign supply have kept U.S. 10 year yields above 4%, even with a September Fed cut likely. In India, auction supply and lighter demand have pushed the 10 year G-sec into the 6.50-6.60% range, with long-end corporates moving in tandem. For investors, the message is clear: focus on carry and quality, ladder across the 3-10 year segment, and use volatility to selectively add duration.

Q2. U.S. bond yields continue to remain elevated. Do you believe we are moving into a "higher-for-longer" interest rate regime, and how should Indian debt investors position themselves accordingly?

Ans: Even with a likely 25 bps rate cut, the Fed's guidance and large fiscal deficits are keeping long term U.S. bond yields relatively high, so rates are unlikely to fall quickly. For Indian investors, we prefer 5-10 year G-secs and SDLs for carry and to manoeuvre global uncertainty, AAA PSU bonds for safer spread pickup, and 3-5 year roll-down strategies to smooth volatility. Duration can be scaled up once U.S. yields gravitate toward the 3-3.5% zone over the medium term.

Q3. Rising developed market yields often impact foreign flows. With India's inclusion in global bond indices, do you see these trends affecting foreign inflows into Indian debt markets?

Ans: India's upcoming entry into J.P. Morgan's GBI-EM index and Bloomberg EM Local index anchors long-term demand for G-secs. While short-term flows could still toggle with global yields, the index-related structural bid is expected to offset volatility and gradually increase foreign participation in Indian debt market.

Q4. In the current scenario, how should investors balance allocations between sovereign bonds, corporate bonds, and newer avenues such as private credit AIFs?

Ans: One may keep the core of portfolios in sovereigns and SDLs (5-10Y) for liquidity and stability, with AAA PSU corporates added for measured spread pickup. Private credit AIFs can serve as a satellite allocation for investors with higher risk appetite and longer horizons, offering illiquidity premia but requiring careful manager selection. Money market and ultra-short duration strategies remain suitable for near-term cash segmentation.

Q5. With GST rationalisation potentially lowering fiscal revenues and pushing up government borrowing needs, do you foresee a crowding-out effect on the bond market?

Ans: Lower GST revenues could modestly raise borrowing needs, but buffers such as the RBI dividend, unused capex headroom, and market based borrowing flexibility could limit crowding out risks. Auctions may clear with higher tails, but not fail. We expect the RBI to step in with Open Market Operations (OMO) purchases and liquidity tools if pressures build. Investors can use such yield spikes to add quality exposure.

Q6. With inflation trending below RBI's midpoint target, do you see scope for a rate cut, or will the central bank prefer to remain cautious given fiscal and external risks?

Ans: With headline inflation easing and core below 4%, the RBI has room to cut rates in October or December, but is likely to remain cautious until tariff risks and external balances stabilse. The Monetary Policy Committee's (MPC) stance is expected to stay data driven. For investors, this favours carry-led strategies today, with the flexibility to extend duration if and when the RBI signals easing.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY

Mr. Harshad Borawake

Head of Research & Fund Manager - Equity, Mirae Asset Mutual Fund

Mr. Harshad Borawake joined Mirae Asset Mutual Fund in December 2016 as the Head of Research. Along with strengthening the overall research and investment processes, his core coverage sectors include Financials, Oil & Gas and Economy.

He has an overall professional experience of more than 19 years across industries like Financials, Oil & Gas, Logistics and Aviation. Prior to joining Mirae Asset, he was with Motilal Oswal Securities as Vice President (Research) and Capmetrics & Risk Solutions as Research Analyst - Equity. Mr. Borawake is a Bachelor in Engineering and has done MBA in Finance.

Mr. Borawake manages Mirae Asset Aggressive Hybrid Fund, Mirae Asset Balanced Advantage Fund, Mirae Asset Equity Savings Fund & Mirae Asset Multi Asset Allocation Fund.

Q1. The current geopolitical and trade developments-including the recent 50% tariff by the U.S. on Indian imports, and talk of broader tariffs on sectors like pharma-have added a layer of uncertainty. How should Indian investors interpret these global headwinds while continuing their long-term equity investment plans?

Ans: The tariff issue is very fluid and given that negotiations are underway, we have not seen the end of it. Nevertheless, India’s exposure in terms of goods exports to US is ~2% and hence not that meaningful. Indian economy is largely inward looking economy and investors should focus more on the corporate earnings growth. After dismal sub 2% growth for Nifty 50 in Fy25, earnings revival is expected in FY26 led by tax incentives, RBI infused liquidity, good monsoon, festive season and base effect. Given the valuations, investors should temper down the return expectation in the near term, while continue to remain invested from medium to long term perspective and growth levers for Indian earnings continue to remain strong.

Q2. On the domestic front, we’ve seen persistent FII outflows despite relatively strong macro fundamentals. What are the key factors driving this trend, and should retail investors be concerned-or see this as a contrarian signal?

Ans: FII inflow and outflows are driven by multiple factors including relative valuations of India and other competing economies. With the strong domestic flows now led by SIPs the impact of FII flows now impacts relatively less than few years back. Investors should focus more on corporate earnings growth and valuations than these factors.

Q3. With market valuations varying across segments, where do you see better risk-adjusted opportunities for SIP investors today-large caps, midcaps, or small caps?

Ans: It is better to take a basket approach with large part 60-65% towards large cap and the rest in mid and small cap.

Q4. For investors considering momentum or factor-based strategies, what performance metrics beyond historical returns should they closely monitor?

Ans: Any Factor investing will expose you to the risk of cyclicity. Rather than relying solely on single factors, we recommend combining momentum or any other factor with contrasting factor as part of your portfolio. While evaluating any factor, key is to understand the methodology of the factor investment, looking not only return and risk but also focusing on rolling return specially percentage of periods the strategy outperforms its benchmark, showing persistence. Downside deviation and Sortino Ratio and Information Ratio will also be key along with Upside and downside capture ratio. Evaluate factor investing from long-term investment horizon and framework i.e. at least 5 Yr + is critical. Lastly, suitability of each factor investment based on risk and return framework of individual client is essentially. For example, for you can give momentum from large mid universe and give momentum from Mid Small universe as well.

Q5. A widely cited and persistent concern among investors is the challenge active funds face in consistently outperforming their benchmarks, especially after fees. How do you address this common perception, and what specific characteristics of your investment philosophy or process do you believe give your fund a sustainable edge to generate alpha over the long term?

Ans: Perform in the near term can be volatile, but over the long term, history suggests that the median performance of the active funds is relatively better than the benchmark performance. The basic tenets for a sound portfolio include bottom up stock piking based on fundamentals, management quality and valuations along with barbell approach wherein we have combination of growth as well as value names. Out philosophy is centered around buying good quality business upto a reasonable valuation, backed by strong management and holding them for the long term. Also, while all the stocks come from a bottom up stock picking process, we also keep cognizance of the benchmark while building the portfolios.

Q6. Could you please provide your analysis of the Q1 earnings season and outline your expectations for Q2, specifically highlighting how you are factoring in the current global macroeconomic tailwinds?

Ans: This earnings season has been marginally better than expected on the headline numbers are concerned with numbers coming marginally ahead of estimates. (on back of Construction materials, financials, metals & minings, Autos). As said earlier, we expect consumption piece in the economy to review in the 2H and from the Q2 results perspective, we would more watch out for management commentary than the actual results to get sense on the overall earning revival trajectory.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY

Please note we have published the answers as it is received from the Fund Manager of Mirae Asset.

Mr. Mahendra Kumar Jajoo

Chief Investment Officer - Fixed Income, Mirae Asset Mutual Fund

Mr. Mahendra Kumar Jajoo is responsible for managing fixed income assets across all products. He has over 31 years of experience in the field of financial services including 17 years of experience in Fixed Income funds management.

He is overall responsible for supervising all Debt schemes of the Mirae Asset Investment Managers (India) Private Limited.

In his prior assignment, he has been associated with organizations like Pramerica Asset Managers Pvt. Ltd., Tata Asset Management Ltd., ABN AMRO Asset Management Ltd and ICICI Group.

Mr. Jajoo manages Mirae Asset Aggressive Hybrid Fund, Mirae Asset Balanced Advantage Fund, Mirae Asset Equity Savings Fund & Mirae Asset Nifty SDL Jun 2028 Index Fund.

Q1. The RBI has kept the repo rate unchanged, as widely expected, even as inflation projections have softened and global uncertainties-like new tariff threats and evolving Fed policy-persist. How do you interpret the central bank’s stance, and what signals should investors be watching from both the RBI and the US Fed in the months ahead?

Ans: RBI indicates that the current fall in inflation is already factored in it front loaded 50bps rate cut in June. While domestic factors suggest scope for incremental rate cuts in India, the global factors are somewhat uncertain.

Fed is also concerned with tariff related inflation and steeper yield curve with dwindling demand for US treasuries.

Investors may watch for any change in stance on these issues by the respective banks.

Q2. Beyond the RBI's policy, what are the key domestic and global macroeconomic trends that you believe are currently shaping the Indian bond markets? Where do you see the most significant tailwinds and headwinds?

Ans: Dwindling demand for US govt bonds is the most significant headwind for now for Indian bonds, not allowing further fall. RBI has already frontloaded rate cuts and has injected massive liquidity in the system recently. Further, domestic macro remains supportive for lower rates providing tailwinds.

Q3. How do you define your investment philosophy as a fund manager, and how has your strategy evolved over the past 12–18 months?

Ans: At Mirae, FMs keep analyzing the evolving scenario on a continuous basis and construct portfolio in line with the expected market outlook and the fund’s investment objectives. If the rates outlook is positive, FMs would likely be overweight and vice-versa. The strategy has worked well and is inherently dynamic.

Q4. What role can target maturity funds (TMFs) play in an investor’s portfolio today, especially in light of expected stability or mild downward movement in rates?

Ans: TMFs is a product, closest to an FD but with very significant additional advantage for the investors. It offers for all practical purposes a free put option to the investors. That’s to say, if the market is adverse, the investor can hold the investments like any other FD/FMP without much fear of any terminal capital loss. However, if the market is favorable, investor may cash out capital gains at a time of his choosing.

Q5. Geopolitical tensions globally have often pushed investors toward the safety of bonds. Are you seeing any such shift in sentiment or flows toward Indian fixed income assets?

Ans: At the moment, markets seem to price in the confidence that the ongoing geopolitical tensions would dissolve eventually without much negative impact. At this point, one has not seen any defensive shift towards fixed income

Q6. In the current environment of macro uncertainty, what broad investment strategy would you advise for debt mutual fund investors-especially those in low- to moderate-risk profiles?

Ans: Follow an accrual-oriented strategy for now. The best time for duration strategy has just crossed behind. Money market curve is relatively steep offering options in the low duration and money market category

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY

Please note we have published the answers as it is received from the Fund Manager of Mirae Asset.

Mr. Devang Shah

Head – Fixed Income India, Axis Mutual Fund

Devang Shah is the Head of Fixed Income at Axis AMC. He joined the fund house in 2012 as a Fund Manager and was elevated to the position of Head – Fixed Income in 2024.

He has over two decades of industry experience of which, 18 years have been spent in the Mutual Fund industry. His core responsibilities include managing top quartile performance for all Fixed Income Funds & managing client relationship. Additionally, he has been actively involved in ideation and determining the investment strategy for fixed income funds.

Prior to joining Axis AMC, he was associated with ICICI Prudential AMC (2008-2012) as a Fund Manager and was also the head of credit. He has also worked with Deutsche AMC and PwC.

Educational Qualification: B.Com from Mumbai University and a Gold Medallist in Financial Management, Associate Member of ICAI

Q1. Given rising global uncertainty-from the Israel-Iran tensions to the ongoing Russia-Ukraine war-how should fixed income investors position themselves to manage risks around global inflation, volatile oil prices, and shifts in safe-haven flows?

Ans: Geopolitical conflicts have been on the rise in the last few years. The unfortunate part is one cannot control these external risks. This is where investors can diversify their asset allocation and participate in fixed income funds. The start of the rate cycle proved beneficial for long duration funds. However, I believe now is the time to participate in short term funds and these can outperform long bonds from risk risk-reward perspective due to a shallow rate cut cycle, lower OMO purchases in the second half of the year and a shift in focus to Govt Debt to GDP targets.

Q2. With the RBI’s recent 50 bps rate cut, how do you interpret the central bank’s message to the market? Do you see this move as a pre-emptive easing to support growth, and how might it reshape fixed income strategies going forward?

Ans: The 50 bps repo rate cut was larger than expected but the change in stance to neutral and the CRR cut was a surprise for the markets. The central bank has been proactively managing liquidity and had already announced measures so there were no expectations on this front from the policy. I had been of the view that this current cycle would be shallow and that’s exactly how the cycle played out. The central bank is definitely prioritising growth while inflation is well under control. As indicated in most of our communication pieces, a significant part of the bond market rally is behind us and there would be limited rate cuts and that too if we see weaker growth. Rates will stay lower for longer. I expect macro indicators like GDP, CPI to remain soft for FY26. Consequently, there is nothing that can lead to significant upside in yields. I expect 1-5-year corporate bonds to rally and outperform long bonds on a risk reward perspective.

Q3. The RBI has recently discontinued daily Variable Rate Repo (VRR) auctions in light of a ₹3 lakh crore liquidity surplus. How do you interpret this move, and what does it signal about the RBI’s evolving liquidity stance and its potential impact on short-term rates?

Ans: The central bank had introduced daily VRR auctions on January 16, 2025, to address temporary liquidity tightness caused by tax-related outflows and foreign exchange interventions. However, with liquidity conditions now easing, the RBI is shifting its focus to stabilising overnight money market rates, which have been trending lower due to excess funds in the system.

We believe that these daily VRR are not the need of the hour and there is enough liquidity in the system.

Q4. India’s 10-year benchmark yield is currently around 6.31% as of July 15th. How are you positioning your portfolio across the curve in this environment? Are there specific segments-short, medium, or long-that offer better value at current levels?

Ans: After the larger-than-expected repo rate cut, shift to neutral stance from accommodative and unexpected CRR cut, markets remain in neutral. Liquidity remains abundant and we do not anticipate further cuts in the next 3-6 months. Analyzing macro data, lower GDP, softer CPI, lower for longer rates and abundant liquidity, we expect 1-5-year corporate bonds to rally and outperform long bonds on a risk reward perspective and foresee a limited rally in government bonds going forward. In fact we have shifted our allocation from higher government bonds to higher corporate bonds.

Q5. The RBI has revised its inflation projection from 4% to 3.7%. In your view, does it create room for more policy easing in the coming quarters?

Ans: As against the central banks inflation projection, headline inflation is already at 2.1% and I do not expect it to remain lower at this level for long. I believe that the RBI has frontloaded the interest rate cuts for this cycle; rates will remain low, and liquidity will remain abundant. While inflation projection for Q1CY26 is above 4%, we believe that unless we see big growth shocks there will be limited room for easing.

Q6. In your opinion, what could be the key triggers that might lead the RBI to consider another rate cut in the near term?

Ans: As mentioned earlier, I do not foresee further rate cuts in this year. However if the RBI was to cut rates it would be on account of a large slowdown in growth.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

Please note we have published the answers as it is received from the Fund Manager of Axis.

Mr. Shreyash Devalkar

Head - Equity, Axis Mutual Fund

With a rich experience of over two decades in the equity markets, Shreyash Devalkar is the Head – Equity at Axis AMC. He joined in 2016 as a Fund Manager and was elevated to the role in 2023. He manages some of the flagship funds at Axis AMC such as the Axis Bluechip Fund, Axis Midcap Fund, Axis ELSS Tax Saver Fund, Axis Growth Opportunities Fund, and a few more.

Prior to joining Axis AMC, he was associated with BNP Paribas AMC as a Fund Manager for more than 5 years. He has also worked as a Research Analyst at IDFC Asset Management Company (July 2008 to Jan 2011) and IDFC Securities (Sept 2005 to July 2008).

Qualification:- Chemical Engineering from UDCT, MMS Finance from JBIMS

Q1. How do you interpret the current domestic macro tailwinds in the context of ongoing global uncertainties? In your view, how is the market navigating and balancing these contrasting forces?

Ans:- In the last 3-4 months, we have witnessed markets post a sharp recovery with returns ranging above 18%-25%. FIIs returning to equities, consistent inflows from DIIs, relatively attractive valuations were the key reasons for the surge in equities. The triggers going ahead will be how the tariff scenario unfolds for India on relative basis compared to competing countries in respective goods and the ongoing earnings season. If we look at the macro factors, we stand supported by surplus liquidity and lower interest rates, our twin deficits are in control, inflation is well below RBI’s target and growth seems reasonable. Stability in currency and low inflation may offer some room for further rate cut.

Q2. With the June quarter earnings season now underway, how do you assess the performance outlook for India Inc. this quarter?

Ans:- We believe that this quarter could be in line with expectations, because earnings expectation are already cut across. Overall, the growth is still expected to be in single digits. At a sector level, banks may face a drag from NIMS given falling interest rates, automobile sector is expected to stay subdued while the pharma segment could report decent growth. Consumption companies have been a pain point however going forward this could improve if consumption rebounds. Industrials and manufacturing could do better than market expectations.

Q3. Foreign institutional investors haven’t fully returned to Indian markets yet - in your view, is it valuations or earnings that are holding them back?

Ans:- It’s a combination of two things. Higher valuations led to FIIs moving back and returning when valuations turned better, and interest rate differential compared to US. Although not out of the woods, earnings selectively may turn out to be better than expected. We believe markets are in a phase where we could see some fair amount of volatility and push and pullback from the FIIs.

Q4. We've seen a surge in new products, categories, and investment avenues. Has this led to a ‘problem of plenty’ for investors? And could passive investing offer a way to simplify decision-making?

Ans:- We believe that different investors have different choices, some choose active funds for the alpha, while other may want to just invest in passive funds for their simplicity. As markets mature, new opportunities arise and I believe investors should explore new avenues of investing. Spreading assets across products, categories and avenues can provide investors an immense wealth creation journey.

Q5. How should investors position themselves in the small and mid-cap segment? Are we seeing a meaningful improvement in profitability relative to large caps based on current data?

Ans:- Although large-cap stocks have gained favor in recent months following the sharp correction, I always believe in being invested across the market capitalisation. Many large-cap companies have shown relatively modest growth in the current cycle, making their valuations more reasonable compared to pre-COVID levels. On the other hand, sectors such as defense, power capex, tourism, and EMS are experiencing strong growth, but valuations in these areas are quite elevated. These themes are more prominently represented in mid- and small-cap segments. Therefore, it’s advisable for investors to stay invested across the market cap spectrum. However, stock selection remains critical-simply allocating across asset classes may not be enough to generate superior returns.

Q6. As a fund manager, how do you determine the right time to exit a sector-especially when it remains in favour but the fundamentals appear to be weakening?

Ans:- When fundamentals are weakening on relative basis - both in the context of valuations and compared to other sectors, it is generally time to reduce exposure, we follow this principal across market cycles.

Please note we have published the answers as it is received from the Fund Manager of Axis.

Mr. Marzban Irani

Chief Investment Officer – Fixed Income, LIC Mutual Fund

Mr. Marzban Irani is our debt market expert having rich experience of 25 years in Fixed Income. He has played a pivotal role in building LICMF’s image of Mutual Fund of investor’s choice for Debt funds. Mr Irani is a PGDBM - Chetana’s Institute of Management & Research, Mumbai. B.Com – Mumbai University.

Experience:

Chief Investment Officer Fixed Income - LIC Mutual Fund Asset Management Ltd. (w.e.f. 24/04/2019)

Fund Manager Fixed Income - LIC Mutual Fund Asset Management Ltd. (w.e.f. 04/08/2016)

VP Fixed Income - DSP BlackRock Investment Managers (Jun 2014 Jul 2016)

Senior Fund Manager Fixed Income - TATA Asset Management (Jun 2011- May 2014).

Fund Manager Fixed Income METLIFE INDIA INSURANCE (Sep 2010 May 2011)

Fund Manager Fixed Income - Mirae Asset Global Investment Mgmt India (Jan 2008 Jul 2010)

Fund Manager Fixed Income TATA Asset Management (Sep 2000- Nov 2007)

Q1. May 2025 witnessed one of the year's strongest net FPI (Foreign Portfolio Investor) inflows. What could be the reasons behind this surge?

Ans 1. Debt inflow was only 1100 cr.

Q2. How do you interpret the RBI's recent repo rate and CRR cuts? Do you believe the RBI has strategically frontloaded these measures, anticipating a surplus liquidity situation that might require further rate adjustments closer to Q4 FY26?

Ans 2. In the June 2025 policy the RBI has cut the repo by 50 bps. When the rate cut cycle started, the cut expectation was lower. In the rising interest rate scenario, the domestic rate hikes were limited unlike the US where the rates went up from almost 0 to 5%. Hence the leeway to cut was limited. Domestic inflation has bottomed out. Going ahead, there are geo- political risks. Ukraine Russia war is not yet over, the recent Iran Israel conflict is on and India has had a short war with Pakistan. Monsoon which was expected to be normal has been below expectations in the month of June. We would know by august how the monsoon has fared like spatial distribution etc. Oil prices have moved up and India being a net importer of oil has to be watchful. All these factors may pose an upside risk to inflation. Going ahead, global growth is a challenge. Also private capex needs to come up. Consumption needs a boost. Hence between growth and inflation tradeoff , the growth numbers needed a push. Hence, this was a good decision from RBI to cut rates on a proactive basis. As far as CRR is concerned, as we move into the busy season, at the time of advance tax outflow/GST outflow there can be liquidity mismatch temporarily. Hence infusion via CRR may help to balance out liquidity.

Q3. The RBI's shift from an accommodative to a neutral stance has surprised many. What do you believe is the rationale behind this change, and how do you anticipate it will impact the RBI's future projections?

Ans 3. The leeway to cut is limited. Accommodative stance indicates a cut or a pause. As the leeway to cut is not visible in the immediate future, the neutral stance was announced. As far as liquidity is concerned RBI has ensured ample liquidity with a preemptive CRR cut especially during the festive season which would help in further transmission of the rate cuts. RBI may continue to be data dependent especially on the geo political front and guidance by FED.

Q4. What does rise in US Bond Yields mean for Indian markets? Could this lead to a rotation from equities to bonds, as seen historically?

Ans 4. Decoupling has been happening in the last few years. Spread which was around 500 bps has now shrunk to around 150 bps. DE dollarization is the key thing. China has reduced US treasury holding and central banks are shifting gradually to gold reserves. Today the dollar is the reserve currency but going ahead it might lose this position. What will matter for rates in India is the stability of currency which has been largely impacted currently by the geo political scenario rather than US rates.

Q5. Are you observing a growing investor preference for Debt + Arbitrage funds? How do you assess their suitability in the current market environment?

Ans 5. From a tax perspective this product is looking good at the moment. Volatility is less. However, investors should choose to invest based on their investment horizon and risk appetite.

Q6. What factors do you anticipate will drive the Indian fixed income market in 2025?

Ans 6. In the last three years starting July 2022 where the yields almost peaked, investors in fixed income have been getting capital appreciation besides regular accrual. As we move ahead capital appreciation looks limited or flat. Hence it will be an accrual strategy. Hence investors with fixed income allocation should stick to their allocation. It’s a cycle which will change. The fiscal deficit number has been declining. The government is following a prudent path. This might lead to a global rating upgrade going ahead.

Please note we have published the answers as it is received from the Fund Manager of LIC.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

Source: RBI, Bloomberg.

Disclaimer: The views expressed herein are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information / data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risk and uncertainties that could cause actual results, performance, or event to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in the future. LIC Mutual Fund Asset Management Ltd. / LIC Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investment made in the scheme(s). Neither LIC Mutual Fund Asset Management Ltd. and LIC Mutual Fund (the fund) nor any person connected with them, accepts any liability arising from the use of this document. The recipients before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.

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