Kiran Asso Pvt. Ltd.

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. 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.