Mr. Harsha Upadhyaya

Chief Investment Officer - Equity

Kotak Mahindra Asset Management Company Limited

Harsha Upadhyaya heads the equity desk at KMAMC, and also directly manages funds such as Kotak Standard Multicap Fund, Kotak Equity Opportunities Fund and Kotak Tax Saver. Harsha has over two decades of experience spread across equity research and fund management. He has previously worked with DSP BlackRock, UTI Asset Management, Reliance Group and SG Asia Securities. Harsha completed his Bachelor of Engineering (Mechanical) from National Institute of Technology, Suratkal and holds a Post Graduate Diploma in Management (Finance) from Indian Institute of Management, Lucknow. He also holds Chartered Financial Analyst charter from the CFA Institute, US. Harsha follows various sports, and was a hockey player while at the university.

Q1. Trump won the US elections. How do you think it would impact the Indian markets? Which sectors in India could benefit out of this and which ones stand to lose the most because of this change in US president?

Ans: India has been cordial relations with both the parties in US, so our relationship with US doesn’t get impacted with Trump winning. Trump is pro business and wants spendings to move up by cutting taxes. This may lead to increased IT spendings by US corporates which is good for Indian IT. Their is also a possibility of dilution in BASEL III norms which may again spur growth spends and benefit Indian IT. Trump administration may take steps to end Russia- Ukraine war which may result in growth in the European region , which in turn is good for global markets.

Q2. Foreign investors pulled out a massive ₹94,000 crore from the Indian stock market in October, making it the worst-ever month in terms of outflows. What do you think would be the trigger for them to come back to India?

Ans: Foreign investors are pulling the money out from emerging markets to deploy in the US market. The hopes of tax rate cut to result in earnings upgrade is one big reason for this massive pullout from emerging market. Once the trade settles, investors shall realize the long term potential for Indian equity market and shall relook at their allocations again. The portfolio allocations at the start of the new year could be one such trigger point.

Q3. What is your outlook on Samvat 2081? Do you expect the Nifty to deliver double-digit returns in the upcoming year?

Ans: Samvat 2081 starts on the back of very strong returns in the market especially from COVID-19 lows. The earnings growth momentum for the next two years is still in double digits . So, it is not unreasonable to expect a similar returns from the market especially the large caps. Though, any cut in earnings for FY25/26 or a multiple derating can result in inferior returns . We are still hopeful of a low double digit return form the current levels post the recent correction in the market .

Q4. Major IT companies have reported their Q2 results, and the BSE IT index has risen over 20% in the past six months. Based on the management commentary, what trends or insights are you picking up regarding the sector's outlook?

Ans: IT companies have reported a decent pick up in deal flow especially in small and discretionary projects. Management is seeing a growth recovery in segments like BFSI, Hi-ech and retail. Companies are expecting the margins to stabilize and see an upward bias despite Q3 typically seeing high furloughs.

Q5. The festive season typically brings a surge in consumer spending. Have you observed any significant changes in consumer-driven sectors this year? Are there any particular sectors within India that have performed better or worse than expected?

Ans: The festive season has gone well as per various channel checks. The commentary from various companies is coming positive especially for the rural part of the economy. The urban centric consumption has taken a slight back seat which many are saying that shall pick up as government spending picks up pace. The impending wedding season is also giving hopes for a buoyancy returning to the consumption segment in coming months.  We have seen a sharp pickup in the festive season in segments like passenger vehicles , two wheelers and durables. Alcohol companies have also reported brisk sale . Apparel and jewelry companies also reported good sales growth.

Q6. Every bull market comes with its share of corrections, testing investors' patience along the way. What advice would you give to investors who are holding off on buying, despite having a shopping list ready? They were waiting for a dip, but now seem hesitant to take the plunge.

Ans: Over the history of Indian equity market, market has corrected by ten percent or more from its peak in almost all the calendar years. So, correction is a part of the overall market movement. One shall not get scared from corrections but may use them as an opportunity to build up portfolios for long term. In our view, if you have a five year or more time horizon in equity market, the best time to invest the money is NOW.

Mr. Neelesh Surana
Chief Investment Officer (CIO) - Equity, Mirae Asset Investment Managers (India) Pvt. Ltd.

Mr. Neelesh Surana is Chief Investment Officer at Mirae Asset Investment Managers (India) Private Limited. He joined Mirae Asset in 2008. In his capacity as CIO, Mr. Surana spearheads the research and fund management function. An engineering graduate with MBA in Finance, he has over 32 years of experience in equity research and portfolio management. Mr. Surana manages Mirae Asset ELSS Tax Saver Fund & Mirae Asset Large & Midcap Fund.

Q1. How do you anticipate October will differ from September? While September focused on flows and the Fed, do you think October will center around earnings and the festival season?

Ans: October is likely to shift focus from the flows and Fed decisions that dominated September to earnings reports and consumer demand during the festival season. As companies start releasing their quarterly results, markets may be influenced by performance metrics and guidance for the upcoming quarters. However, there are many other ongoing global and domestic nuances that could impact markets, which are always difficult to predict in the short term.

Q2. Given the substantial growth in F&O volumes and the increasing participation of retail investors, do you believe that the recent regulatory measures introduced by SEBI will be effective in curbing retail participation in the derivatives market?

Ans: The recent regulatory measures by SEBI aim to promote responsible trading in the derivatives market. The F&O volumes in India in recent periods have increased substantially, and to protect overall investor interests, it has implemented restrictions and changes around the F&O market. The effectiveness of these regulations, which are yet to be implemented, will depend on how they are perceived by investors and whether they adapt their strategies accordingly.

Q3. With the US reducing rates by 50 basis points and China implementing stimulus measures to support its economy, will India continue to stand out as a bright spot, and for how long?

Ans: India's economic fundamentals and high growth potential, owing to favorable demographics and improving digital and physical infrastructure, position it as a bright spot. 

The factors related to China's strong monetary and fiscal stimulus are aimed at addressing its economic challenges. In the near term, we have seen some allocation shifting to Chinese markets, which was funded by selling India. However, for now, it seems tactical as the Chinese market is extremely cheap compared to India, and thus the sustainability of this trend depends on various factors. Broadly, we believe India will remain strong amid various global economic uncertainties, and over time, investment flows should remain robust.

Q4. Is the IPO market in 2024 different from the speculative frenzy of 2021? Do you believe that the current focus on profitability is more sustainable and indicative of a healthier market?

Ans: The CY24 YTD IPO has totaled INR 73.5k crore, which is less than the INR 1.3 lakh crore IPOs in CY2021. The phrase "This time is different" is often cited as one of the most dangerous in investing because it can lead to complacency and overconfidence. That said, on some parameters, the IPO market in 2024 appears to be more grounded compared to the speculative frenzy of 2021. The current emphasis on profitability and sustainable business models suggests a more cautious and mature approach from both companies and investors. That said, there are clearly pockets of excess, such as froth in SME markets or certain sectors driven by narratives of strong growth.

Q5. Which sectors or areas do you identify as having low risk and greater earnings stability? Are there any sectors you would recommend investors to avoid at this time, as they may have already peaked?

Ans: Sectors such as financials, utilities, consumer goods, and healthcare often exhibit greater earnings stability due to consistent demand for their products and services. We are cautious about sectors where PE multiples have increased disproportionately compared to growth, such as those in capital goods, defense, and industrials.

Q6. How should retail investors react to the heightened volatility driven by macroeconomic and regulatory factors? What strategies can they adopt for both long as well as short term horizons?

Ans: In times of heightened volatility, retail investors should consider adopting a balanced approach regarding asset allocation and scheme selection. Focusing on quality stocks with strong fundamentals and a long-term horizon is advisable. SIPs, along with proper asset allocation and expectations of moderate returns, are key now. 

It’s important for investors to reduce their return expectations and not get carried away by the abnormally strong returns achieved in the last two years.

Mr. Mahendra Kumar Jajoo
Chief Investment Officer (CIO) - Mirae Asset Investment Managers (India) Pvt. Ltd .

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 Mr. Mahendra Kumar Jajoo Asset Nifty SDL Jun 2028 Index Fund.

Q1. The RBI's Monetary Policy Committee, on October 9, decided to maintain the key repo rate at 6.5%, shifting its stance from "withdrawal of accommodation" to "neutral." What are your thoughts on this change?

Ans: The change in policy stance to neutral came as a pleasant surprise, against the broader market expectations of status quo. This has reinforced expectations of commencement of a rate cut cycle soon. Also, timelines on rate cuts by most analysts is also shifting towards December 24 from early 2025.

Q2. What key economic indicators are you monitoring that could impact fixed income markets in the coming months?

Ans: Some of the key monitorables for MPC and fixed income markets remains inflation, growth and global developments (geopolitics and global central bank actions). Apart from these key factors, it is also essential to keep track of the speeches from the monetary committee members in order the gauge the direction the policy can take in near term.

Q3. The 10-year Indian benchmark yield decreased by about 13 basis points, while the 5-year yield fell by roughly 8 basis points. What could be the possible reasons for this fall?

Ans: As mentioned above the change in stance came in against the market expectations. In such situation the longer end is likely to react more aggressively than the shorter end in expectations of rate cuts. Therefore, longer end witnessed drop of 13bps vs 8bps in 5Y.

Q4. What strategies are you employing to manage risks in your fixed income portfolio as market conditions evolve?

Ans: Our portfolios are carefully constructed taking liquidity, credit and asset-liability profile risks into consideration. This not only helps us to manoeuvre through various situation smoothly but also helps us to navigate the volatility and take necessary portfolio changes at ease.

Q5. How is technology changing the way fixed income markets operate, and what opportunities does this present?

Ans: While tech has come leaps and bounds, for fixed income markets it still largely remains at nascent stage, fixed income market markets still remain very traditional phone market. There lies lot of opportunities in fixed income market for technology development aspect.

Q6. What is the current market sentiment among investors regarding fixed income, and how do you see it evolving?

Ans: Fixed income market outlook has been changing rapidly of-late with market rates moving sharply in anticipation of evolving macros. While the sentiments are increasingly turning upbeat, investors seem to have possibly missed out on a large part of the rally so far, at least judging by incremental flows in debt mf schemes. Some scepticism till remains with many contemplating if the rally is done or there could be further drop in yields. In our view there is still scope in fixed income market, which may once again positively surprise the investors.

Mr. Anurag Mittal
Head - Fixed Income, UTI Asset Management Company Limited

Anurag Mittal is the Head - Fixed Income at UTI Asset Management Company Ltd. He is a Chartered Accountant affiliated with Institute of Chartered Accountant of India and holds a degree in Master of Science from University of London. He previously held the office of Senior Fund Manager at IDFC Asset Management Company Private Limited and managed key IDFC debt mutual fund schemes. Prior to this, he was associated with HDFC Asset Management Company Limited as Senior Manager - Investments and Axis Asset Management Company Limited as Fund Manager - Investments, responsible for Fund Management, Dealing and Research.

Q1. With growing speculation about a potential rate cut by the US Fed, which might prompt a rate cut by the RBI in India, what trajectory do you anticipate for interest rates? How could this affect your funds?

We expect 50-75 bps rate cut by the RBI in the next 6-12 months primarily due to easing food inflation and moderating economic growth. Given the expectations of a shallow rate cut cycle, we expect short to medium duration segments (3-7 years) of the yield curve to outperform in the medium term. We are accordingly positioned in our actively managed funds.

Q2. What will be the impact of geopolitical actions like war in Ukraine and Russia, Bank of Japan's interest rate hike and weaker U.S. labor market data on India's debt market?

Typically, geo-political tensions or volatile currency movements due to central bank actions (for example Bank of Japan’s) are negative for emerging markets. However, India’s favorable current account dynamics due to its improving service exports, high foreign investment flows & the robust FX reserves have helped maintain currency and bond market stability.

The Federal reserve in its last FOMC meeting has already stated that they may look to cut rates as balance of risks has shifted towards growth from inflation and they do not welcome “further cooling in labour market conditions”. Hence, we expect that the weak labour market in the US could propel the Federal Reserve to start its rate cutting cycle by 150-200 bps at a minimum in the next 12 months. While RBI may initially remain on hold given India’s still high growth & historically volatile inflation, we expect them to initiate the rate cutting cycle once they have greater confidence on the durability of disinflation.

Q3. How do you handle credit and interest rate risk within the fund?

At UTI Mutual Fund, we have leveraged our long-term track record of managing fixed income funds, our research capabilities & risk management tools into developing our in house curated fixed income investment framework – “GIMS” which stands for Gate, Investments, Monitoring & Surveillance. The objective of the GIMS framework is to select the most suitable companies for our investment universe, create a framework for portfolio strategy with well-defined risk limits and ensure consistent monitoring of the portfolios.

We strongly believe in active duration management across our funds to optimize our view on interest rates. What is really important for us is to ensure a strong team to safeguard quality views. As Michael Jordan once said, “talent wins games, but teamwork wins championships”. Our team is not only highly experienced but extremely stable. All our fund managers have an experience of 15+ years in UTI.

Q4. What kind of growth have you seen in the popularity of debt funds over the last 4-5 years? What is fueling this trend?

Fixed income funds (excluding liquid/overnight) AUM has grown from Rs. 5.1 trillion in FY19 to Rs. 9.71 trillion in FY24 registering a healthy CAGR of 13.7%. However, the product mix is changing incrementally after the changes in taxation for fixed income mutual funds. While duration and target maturity funds were contributing meaningfully to flows till FY23, it is money management products which are driving flows in recent times. While investors are adjusting to the new tax regime, we believe over the longer term, investors should start re-allocating to fixed income funds to realise the advantage of a diversified, transparent and relatively liquid product.

Q5. This year, foreign investors have poured a net $13 billion into Indian bond markets. A July report from SBI Research forecasts an additional inflow of $20 billion to $22 billion by March 2025. What might be driving these anticipated investments?

India has become part of JP Morgan's Government Bond Index-Emerging Markets from June 2024. The index is being tracked by approximately $213Bn of assets globally (Source: Business standard). Given India’s 10% weight, even an index weighted allocation can potentially bring in approximately $21-$22 billion inflows. Moreover, India is attracting non-index fixed income allocation as well given its stable currency as well as improving fiscal dynamics. India is a very attractive fixed income emerging market which gives high absolute yield with a very stable currency to foreign investors.

Q6. What would be your advice to investors investing for short term, medium term and long-term investment horizon considering the current market trajectory?

Every individual’s allocation may depend on their risk appetite and investment horizon. Typically, investors look at fixed income for predictable and stable returns as well as to provide counter-cyclicality to their equity exposure. Hence, investors may allocate their fixed income investments largely in moderate duration (1-4 years) and high credit quality products. Broadly, investors can consider 5-10% of their fixed income allocation to liquid/overnight funds for their contingency needs. 60-70% of their allocation can be considered for moderate duration funds (1-4 years) & the balance can be allocated to high duration/high credit risk funds as disciplined allocation to provide diversification to an investor’s portfolio.

Source: Bloomberg, AMFI

The views expressed are the author’s own views and not necessarily those of UTI Asset Management Company Limited. The views are not investment advice and investors should obtain their own independent advice before taking a decision to invest in any asset class or instrument.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.