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.

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

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.

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