A BALASUBRAMANIAN, Managing Director & CEO of Aditya Birla Sun Life Mutual Fund, says that stability will soon return to the markets though short-term fluctuations will continue. “During the period of market volatility, investment products like the Multi-Asset Allocation Fund and Balanced Advantage Fund offer a well-structured approach for investors seeking stability and growth,” he told GEORGE MATHEW in a conversation.
He says the fall in oil prices will benefit India. “The earlier rate cut expectation now probably will get fast-tracked by way of cutting 25 bps and monetary policy will also become more supportive of the growth momentum to come,” he says.
The stock market has crashed by 2.95 per cent today. Do you see further fall in the market?
I think the Indian market has fallen in line with the sentiment change globally.
The tariffs announced by Trump have created uncertainty: first, regarding how the balance will shift between countries, and second, about how they will impact inflation and whether they will contribute to a slowdown in the US economy. Therefore, this has raised many questions about how the entire tariff dynamic will affect countries, global growth, and overall uncertainty.
The fall in Indian market is directly linked to that. However, India’s fundamentals on a relative basis, continue to do well due to its large domestic economy. The tariffs announced should not have much impact and are likely to be minimal for India. At the same time, the benefit accruing in the current global market volatility on account of fall in oil prices, might also help India from bringing down the energy cost, and therefore inflation. This could lead to another development for India, which is interest rate cut. The earlier rate cut expectation will probably get fast-tracked by way of cutting 25 bps along with monetary policy becoming more supportive of the growth momentum to come.
Do you see a recovery in the market in the near future?
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The current market volatility, which has led to sharp declines in the last few days resulting in erasing 1-1.5 years of gains, is likely to persist for a short period. In my opinion, this type of volatility does not last for long. The market reaction also paves way for policymakers to implement necessary course corrections, restoring stability and fostering more orderly policy execution. Though short-term fluctuations will continue, I anticipate that stability will soon return to the markets, helping to rebalance investor sentiment and market conditions.
What should be the strategy of retail investors in these uncertain times?
In times of market volatility, investment products like the Multi-Asset Allocation Fund and Balanced Advantage Fund offer a well-structured approach for investors seeking both stability and growth. These funds simplify decision-making by dynamically allocating assets across equities, fixed income, and commodities such as gold and silver.
The Balanced Advantage Fund adjusts equity exposure based on market valuations and sentiment, increasing allocation when the outlook is bullish and reducing it during uncertain phases. Similarly, the Multi-Asset Allocation Fund diversifies across multiple asset classes, ensuring a balanced risk-reward profile. These funds are particularly well-suited for investors who are unsure of market direction, those looking to avoid the low returns of fixed income without taking excessive equity risks, or new investors seeking a structured entry into the market.
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By automatically adjusting asset allocation in response to market trends, they provide a disciplined investment approach, making them an essential component of a well-rounded portfolio. For long-term wealth creation with managed risk exposure, these hybrid funds serve as a reliable investment avenue.
What’s your assessment on India’s economic fundamentals?
I think we are a strong large domestic economy and large public sector investment being made in creating public infrastructure more appealing and viable from a country point of view. We have also seen pickup in the private capex in the last few years. Several major sectors, such as roads, ports, railways, and energy, have been driving economic growth in the country, and I believe this momentum will continue to remain strong. In the recent Union Budget, the Government addressed another important aspect of the Indian economy: the consumption-driven economy. In the last 5-7 years, the Government’s priority has been boosting infrastructure in the country.
Having done that, in the recent budget, they have made a provision for giving more money in the hands of people by exempting them to pay tax up to Rs 12 lakh income, which essentially means the large pool of working population will get released from the tax net, which essentially gives more money in the hands of people. So therefore, consumption-driven growth should come back. The agricultural economy continues to perform reasonably well, and with the predicted good monsoon, this kind of government support will definitely help India outperform other global markets
Will FIIs return to Indian market?
At the same time, we must accept the fact that, in the last year, India has been the only market where we’ve seen sell-off pressure from FIIs. The Indian market has provided substantial returns to private equity players. I believe there is a high probability of FIIs returning to India this year, expecting the country to perform better compared to its global peers.
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How will Trump tariff hike impact Indian economy? What should India do?
Tariffs will have an impact on most of the countries including India. India has also been running a trade surplus with the US, given the fact that we are an integral part of the US economy in multiple ways. This could lead to a slight reduction in India’s trade surplus, although it may still narrow over time.
Given the fact that India plays a very important and integral role in the global economy, the impact of this may diminish as we move forward and the dust settles. However, I believe the domestic economy will continue to be the main driver. Many sectors are focused on meeting domestic needs, and we should expect them to perform well. At the same time, wherever there is a link between India and the US, particularly in technology and pharmaceuticals, the pharma sector should continue to be a key driver and remain an important vertical in the market. Similarly, IT is experiencing a decline due to the expected slowdown in the global market. But if we go by what the US Fed chief says, the job market in the US is not declining. The current tariffs are likely to drive inflation. Therefore, a rate cut may not happen immediately. However, when a rate cut does occur, Indian IT companies will be among the largest beneficiaries, provided US corporations begin investing in IT development activities.