Investor Message - FY26 Q2

The first quarter of financial year 2026 has presented numerous challenges for both global and domestic markets. Global financial markets were impacted by the proposed tariff structure from the US on various countries, compounded by continued geopolitical tensions. However, uncertainty has ebbed due to temporary tariff relief and optimism surrounding trade negotiations.

India has had its fair share of volatility with cross-border tensions and the subsequent ceasefire. Amidst all the uncertainty and market volatility, India continues to be in a sweet spot. The economy remains the fastest-growing globally, with many high-frequency indicators such as GST collections, inflation management, infrastructure investment, and air and railway freight showing strong growth.

From a market perspective, the striking feature of recent times has been the pace at which shocks have been absorbed. While near-term volatility may persist, the amplitude may narrow going forward. In such a scenario, investors must recalibrate their return expectations, which will eventually align with corporate earnings growth in the long term.

In its latest policy, the RBI remained steadfast in its commitment to stimulate economic growth by announcing a 50bps repo rate cut along with a 100bps cash reserve ratio cut. India's central bank set appropriate expectations by removing any element of future uncertainty through advancing the rate cut and changing its stance to neutral. In a declining interest rate environment, the debt-plus-arbitrage category offers better tax-adjusted returns for conservative investors who do not wish to navigate equity volatility.

For long-term investors, SIPs, i.e.. our "Sabse Important Plan" should remain the core investment principle in large-cap or flexi-cap categories, along with hybrid categories like Balanced Advantage or Multi Asset Allocation that allow diversification across asset classes including equity, debt, gold/silver, and REITs.

Happy Investing!

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Regards,
A. Balasubramanian