Dear Investor,

As we enter the festive season spanning from Ganesh Chaturthi to Pongal, I extend my heartfelt greetings to all our valued investors. On a separate note, I commend the Government's prudent and calibrated approach in managing the recent US tariff negotiations, which reflects India's growing maturity in global economic diplomacy.

Charting the Course: India's Journey to Viksit Bharat 2047

The Government and Central Bank have undertaken multiple proactive measures to further stimulate the economy, enabling India to continue its path toward becoming Viksit Bharat by 2047.

Monetary Stimulus – The RBI reduced rates by 100 basis points in the previous quarter and remains committed to stimulating economic growth.

GST 2.0: A Game Changer – The new rate structure simplifies the complexities of the original GST system and is likely to boost consumer sentiment heading into the festive season.

Consumption and infrastructure spending are the two primary drivers of India's growth story. Sectors such as FMCG, automobiles, tourism, hospitality and consumer discretionary stand to be the largest beneficiaries of the GST 2.0 announcement.

Market Outlook: Building on Strong Foundations

Despite an uncertain global environment, Indian equities have continued to consolidate for over a year, establishing a solid base amid healthy volatility, while global markets trade close to their all-time highs.

Indian markets have undergone a time correction following their position as one of the best-performing markets in the post-COVID-19 era. However, I expect momentum to resume following the GST 2.0 announcement, alongside an anticipated pick-up in earnings going forward. I also anticipate the market reaching new all-time highs during the remainder of the current financial year.

Capital Flows: The Domestic-Foreign Dynamic

Historically, foreign investors are well known for entering and exiting their investments decisively. Recent FII selling has been well absorbed by increased participation from domestic investors. It is noteworthy that foreign investors have generated substantial returns from their historical investments in India, which gives me confidence that the return of foreign capital will occur sooner rather than later, driven by low interest rates and high liquidity. This, coupled with reasonable valuations following the consolidation phase, will compel them to increase their allocation toward India once corporate earnings begin improving.

Investment Strategy: Navigating Opportunities

Festive & Wedding Season Positioning – Precious metals have rallied due to factors such as increased participation by sovereign funds. It would be prudent for investors to explore fund-of-funds for participating in gold and silver as an asset class.

Long-Term Equity Strategy – Investors should diversify across large-cap, flexi-cap, small-cap and mid-cap funds.

Conservative Approach – Investors with lower risk appetite should consider balanced advantage and multi-asset allocation funds that diversify across equity, debt, precious metals and REITs.

Happy Investing!

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Regards,
A. Balasubramanian