India remains resilient with a strong absorption capacity despite the surge in equity supply. Right now, demand and supply are largely balanced, keeping markets within a narrow range, he explained.
“But this is temporary—most PE (private equity) exits have already happened, and they’re leaving with big profits, proving India has been their best market. That success will draw them back, likely boosting EM (emerging market) allocations to India in the second half, which could help markets touch new highs by March or even before the Budget,” Bala said. Edited excerpts:
What’s your outlook for Indian equities this fiscal? The market seems to be in a consolidation phase, with tariff uncertainty still weighing. While the Goods and Services Tax (GST) cut has offered some relief, how do you see markets shaping up from here till the end of this fiscal?
My outlook is gradually turning bullish. We’re confident about Indian markets, with improved corporate earnings aided by GST, strong 7.8% GDP (gross domestic product) growth, and rising government and private sector spending. Over the next year, semiconductor and electronics manufacturing will move from setup to production, boosting exports and company revenues. This new earnings stream will strengthen fundamentals, attract upgrades, and reflect in market performance. With domestic consumption resilient and India’s fundamentals acknowledged by rating upgrades, I believe the Indian market is poised to touch a new lifetime high this fiscal.
What’s your view on the surge in equity supply—with promoter exits, private equity (PE) sell-offs, government divestments, and a heavy initial public offering (IPO) pipeline? Could this create a demand-supply imbalance and trigger a market correction ahead?
Despite the surge in equity supply, India remains resilient with strong absorption capacity. Right now, demand and supply are largely balanced, keeping markets sideways (within a narrow range). But this is temporary—most PE exits have already happened, and they’re leaving with big profits, proving India has been their best market. That success will draw them back, likely boosting EM allocations to India in the second half, which could help markets touch new highs by March or even before the Budget.
What’s your perspective on smallcaps versus midcaps? Which segment do you see emerging stronger?
Over the long term—say 7 to 10 years—small and midcaps will be the real winners. In the short term, views may remain mixed, but as India grows and market breadth widens, more companies—be it startups, long-standing businesses, or next-gen firms—will tap the capital markets for expansion. With states competing to become $1 trillion economies and sectors like defence, railways, and manufacturing seeing a revival, SMEs (small and medium enterprises) and mid-small caps will play a central role in wealth creation and economic growth. Large caps will stay relevant, but mid and small caps will dominate over time.
Which sectors are you most bullish on? Is defence one of those?
From a long-term perspective, 65-75% of India’s growth will be driven by banking and financial services, followed by FMCG (fast-moving consumer goods), consumption, auto, cement, capital goods, and energy sectors. Some sectors are structurally bullish, like FMCG, while others are cyclical. Capital goods and infrastructure remain long-term themes due to continuous investment, and the energy sector—especially renewables and solar—will expand as India moves toward 24/7 local power supply, reducing reliance on imported oil and strengthening energy security.
From the business side, where do you see the strongest growth coming from?
Our focus remains to further expand and deepen our presence across the length and breadth of the country with specific strategies not only for the Top 30 and Beyond 30 cities but also for emerging markets in smaller towns. Our other focus area is to grow the alternates business, including offering PMS (Portfolio Management Services), AIF (Alternative Investment Fund) and Real Estate funds to HNI (High Networth Individual), UHNI (Ultra High Networth Individual) and family offices. This year alone, we added about 30 new locations. Within Mumbai, we’re expanding in high-growth areas like Navi Mumbai (Panvel, near the upcoming airport) and Powai. We’re also opening branches in emerging markets where per-capita income and industrial activity are rising—for example, a new branch in Kalyani, West Bengal.
On the retail side, we recently launched a ₹250 SIP (systematic investment plan) to encourage participation from lower middle-class investors. We’re also working with industry bodies and post offices to build mutual fund awareness, which could evolve into an important distribution channel. In short, our strategy is to keep strengthening our existing network while tapping into new growth opportunities.
When it comes to products or asset classes, where is the growth coming from?
In our case, inflows are largely into large-cap, flexi-cap, multi-asset allocation, balanced advantage, and some small-cap funds. These 5-6 schemes form our core portfolio, and we believe about 70% of investor money should be allocated here for the long term. Equity flows remain strong as investors look beyond traditional options like gold, real estate, and fixed deposits.
Alongside this, we’ve built a strong presence in thematic funds, being the first to launch products like the Consumption Fund, MNC Fund, Digital India Fund, and, most recently, the Conglomerate Fund. These form the satellite portfolio, which we suggest should be around 20-30% of allocations.
Broadly, infrastructure spending is on autopilot, but the next leg of growth will likely be driven by consumption. With the recent GST cut on certain products, we expect a further boost in demand—similar to large shopping festivals globally—which could benefit both companies and investors in the thematic space.
How could the GST reforms play out for the mutual fund industry? Could they drive more money into SIPs as the economy benefits?
In my view, SIPs will remain the core of mutual fund investing. With the TINA (There Is No Alternative) factor at play, investors are moving from traditional savings to options that can generate both returns and long-term wealth. Most investors today are satisfied with 9-12% returns, which makes mutual funds a natural choice. A large share of flows is going into balanced advantage and multi-asset allocation funds, reinforcing SIPs as the steady way to invest.
So essentially, the upside from GST reforms should feed into the core portfolio?
GST reforms will significantly impact the economy, with a strong multiplier effect—every rupee saved or spent translates into higher volumes, profits, and wealth creation. It’s a masterstroke reform that can boost local consumption, especially at a time when tariff concerns loom. From a portfolio perspective, we’ve already factored this in, remaining overweight on autos and FMCG—sectors that stand to benefit from GST, good monsoons, and supportive valuations.
What’s your view on the new entrants in the AMC space, especially fintech players? How do you see this competition?
The entry of new players will only expand the market. When we started 30 years ago, there were just three AMCs; today, there are around 55. Over the years, some global players exited due to regulatory challenges or strategic shifts, and we even acquired Apple, Alliance, and ING in that process. Despite exits, the industry’s AUM has consistently grown. New entrants will bring fresh ideas, but investors will continue to value experienced, long-term players like us. So, there’s enough space for everyone as the market expands.
Do you think retail investors’ risk appetite has gone up too quickly?
It’s not so much about higher risk appetite as it is about greater awareness. Retail investors today want to safeguard their money, use it wisely through investments, and generate returns to improve their quality of life. Most households have basic financial goals—owning a home, a vehicle, funding children’s education, family holidays, or weddings. Around 70% of expenses come from these life goals, and investors are realizing that mutual funds can help them plan and achieve them. It’s less about greed and more about disciplined saving and investing for long-term wealth creation.
What does the mutual fund industry need at this stage—especially in terms of key regulatory support?
Regulation is already strong and supportive, thanks to Sebi (Securities and Exchange Board of India) and Amfi (Association of Mutual Funds in India). Enough has been done, and the key now is to keep the faith in mutual funds as an asset class. Perhaps some easing in customer onboarding could help further.
To what extent has Gujarat’s Gift City helped ease the onboarding of foreign customers?
Gift City has been one of the few regulators that consistently listens to market participants and makes proactive changes to attract more players and customers. Over the last decade, it has eased rules for inward and outward remittances and is even exploring digital onboarding for overseas and NRI (Non-Resident Indian) clients. Both Sebi and RBI (Reserve Bank of India), along with Gift City, have acted not just as regulators but as enablers. Now that much of the regulatory groundwork is in place, the onus is on fund houses and banks to bring in more funds and customers.
