The Middle East crisis took a short break before flaring up again. But this time, the market was not as affected as it was in March 2026. What changed?
It’s fluid and volatile, but this time it’s a little different. First, oil prices didn’t rise as sharply as they did during the first round of the conflict. The second is the foreign currency situation in view of Reserve Bank of India’s (RBI’s) action, (In June, RBI introduced a dollar-rupee forex swap facility for fresh foreign currency non-resident or FCNR (B) deposits. The scheme will close on August 31, a month prior to the original closing date of September 30), and the better tax situation for foreign institutional investors or FIIs (the government declared nil tax on interest income and capital gains from Indian government securities for specified foreign investors retrospectively from April 1, 2026).
Third, the corporate earnings (in the June quarter) have been surprisingly strong, which indicates that the underlying corporate environment is quite strong. Fourth, we are still growing at around 6.50-7 per cent real rates. That gives the confidence of stability, compared to where we were 3-6 months ago. But it’s still volatile. If this conflict continues for much longer, oil prices may rise even more, and then that picture could change.
The mutual fund industry has deployed cash big time. Should investors deploy now?
Markets are now at a much more comfortable level in terms of valuation and that has given more confidence to fund managers to deploy additional cash. In June 2026, roughly Rs 4,500 crore was deployed as additional cash. The overall equity assets under management is close to Rs 37 lakh crore.
The market is likely to be volatile in the near term. But given that Indian earnings resilience is there, we are bullish. Ideally, people should stagger their deployments over the next 2-3 months or so.
We will launch something in the PMS space shortly. We are also looking at a GIFT City presence and actively exploring SIFs, which again we may launch soon
What has Bajaj AMC’s strategy been?
As a fund house, we tend not to take cash calls, unless there are extreme situations in the market. We keep a certain proportion of cash for daily transactions, redemptions and so on, but our approach is to give differentiated investment solutions through each of our funds. For instance, our flexi-cap fund is a growth-oriented megatrends fund, our large- and mid-cap fund is a moat-oriented quality fund, while the multi-cap fund is a contrarian fund.
We look to deliver value through better stock selection and asset allocation rather than timing the market. We look at multiple sources of alpha creation, such as the information edge, the quantitative edge, and the behavioural edge.
Bajaj Finserv (the holding company for financial services companies of Bajaj Group) is known for its technological edge. We, too, are (implementing) use cases across functions, from investment to marketing to content creation, sales, and so on. We look at it from the perspective of how it can help enhance productivity, provide better customer experience or maybe greater capability for our internal teams.
1 August 2026
Get the latest issue of Outlook Money
Bajaj MF completed three years in June and your first flexi fund in August. Comment
Our flexi-cap fund was our first equity fund, and so, a flagship fund in many ways. We were clear we needed to bring something which gives us an opportunity to express our investment philosophy. So, we brought the megatrend approach. A megatrend is like these big ocean currents that can move ships much faster if you are going with the current. These could be technology, regulatory, economic, environmental, demographic or social changes. If these are in the favour of the company you are investing in, the company can grow faster.
It has been a consistent performer, generating an alpha of close to 5 per cent. When we started deploying funds in August 2023, the markets were booming, but post September 2024, they have been flat to some level of decline. We have had at least two cycles within the last three years, and for a fund to have performed across these gives us a lot of confidence about our approach.
Any plans for expansion?
We have a bunch of equity, debt and hybrid funds, as well as passives.
The Securities and Exchange Board of India’s (Sebi’s) new consultation paper on portfolio management service (PMS) is quite encouraging. We are looking to launch something in the space shortly. We are also looking at a GIFT City presence and actively exploring specialised investment funds (SIFs), which again we may launch soon.
Could you highlight a few behavioural biases investors should steer clear of?
I will talk about two common biases. One is a loss aversion bias. Let’s say, someone bought a stock at Rs 100 and it falls to Rs 90-95. A person with this bias will keep holding the stock till it comes back to Rs 100. In the process, they may ignore potentially better opportunities and end up with a portfolio where you continue to nurse companies that have not done well, while booking profits on companies that have a lot more to offer.
The second, herd mentality. Just because five or 10 people are saying something doesn’t necessarily make it right. But you want to be with the herd as it’s a very comfortable place to be in. Standing against that is difficult and takes a lot of discipline to do so.
Have you ever given in to a behavioral bias yourself?
Absolutely. I was a young consultant in 1999 during the dot-com boom. Everybody seemed to be making money then, so I invested a small amount in a mutual fund and then the bubble burst. The NAV of Rs 10 reduced to Rs 4-4.50 or so. That time I was like I will never invest in a mutual fund.
The good thing was that I didn’t know how to exit and forgot about it. In the meantime, the fund manager changed the strategy, and when I looked at it recently, it has given 12-12.50 per cent return.
For me one of the biggest learnings is that the market needs time more than anything else.
nidhi@outlookindia.com
