Mr. Devang Shah

Head – Fixed Income India, Axis Mutual Fund

Devang Shah is the Head of Fixed Income at Axis AMC. He joined the fund house in 2012 as a Fund Manager and was elevated to the position of Head – Fixed Income in 2024.

He has over two decades of industry experience of which, 18 years have been spent in the Mutual Fund industry. His core responsibilities include managing top quartile performance for all Fixed Income Funds & managing client relationship. Additionally, he has been actively involved in ideation and determining the investment strategy for fixed income funds.

Prior to joining Axis AMC, he was associated with ICICI Prudential AMC (2008-2012) as a Fund Manager and was also the head of credit. He has also worked with Deutsche AMC and PwC.

Educational Qualification: B.Com from Mumbai University and a Gold Medallist in Financial Management, Associate Member of ICAI

Q1. Given rising global uncertainty-from the Israel-Iran tensions to the ongoing Russia-Ukraine war-how should fixed income investors position themselves to manage risks around global inflation, volatile oil prices, and shifts in safe-haven flows?

Ans: Geopolitical conflicts have been on the rise in the last few years. The unfortunate part is one cannot control these external risks. This is where investors can diversify their asset allocation and participate in fixed income funds. The start of the rate cycle proved beneficial for long duration funds. However, I believe now is the time to participate in short term funds and these can outperform long bonds from risk risk-reward perspective due to a shallow rate cut cycle, lower OMO purchases in the second half of the year and a shift in focus to Govt Debt to GDP targets.

Q2. With the RBI’s recent 50 bps rate cut, how do you interpret the central bank’s message to the market? Do you see this move as a pre-emptive easing to support growth, and how might it reshape fixed income strategies going forward?

Ans: The 50 bps repo rate cut was larger than expected but the change in stance to neutral and the CRR cut was a surprise for the markets. The central bank has been proactively managing liquidity and had already announced measures so there were no expectations on this front from the policy. I had been of the view that this current cycle would be shallow and that’s exactly how the cycle played out. The central bank is definitely prioritising growth while inflation is well under control. As indicated in most of our communication pieces, a significant part of the bond market rally is behind us and there would be limited rate cuts and that too if we see weaker growth. Rates will stay lower for longer. I expect macro indicators like GDP, CPI to remain soft for FY26. Consequently, there is nothing that can lead to significant upside in yields. I expect 1-5-year corporate bonds to rally and outperform long bonds on a risk reward perspective.

Q3. The RBI has recently discontinued daily Variable Rate Repo (VRR) auctions in light of a ₹3 lakh crore liquidity surplus. How do you interpret this move, and what does it signal about the RBI’s evolving liquidity stance and its potential impact on short-term rates?

Ans: The central bank had introduced daily VRR auctions on January 16, 2025, to address temporary liquidity tightness caused by tax-related outflows and foreign exchange interventions. However, with liquidity conditions now easing, the RBI is shifting its focus to stabilising overnight money market rates, which have been trending lower due to excess funds in the system.

We believe that these daily VRR are not the need of the hour and there is enough liquidity in the system.

Q4. India’s 10-year benchmark yield is currently around 6.31% as of July 15th. How are you positioning your portfolio across the curve in this environment? Are there specific segments-short, medium, or long-that offer better value at current levels?

Ans: After the larger-than-expected repo rate cut, shift to neutral stance from accommodative and unexpected CRR cut, markets remain in neutral. Liquidity remains abundant and we do not anticipate further cuts in the next 3-6 months. Analyzing macro data, lower GDP, softer CPI, lower for longer rates and abundant liquidity, we expect 1-5-year corporate bonds to rally and outperform long bonds on a risk reward perspective and foresee a limited rally in government bonds going forward. In fact we have shifted our allocation from higher government bonds to higher corporate bonds.

Q5. The RBI has revised its inflation projection from 4% to 3.7%. In your view, does it create room for more policy easing in the coming quarters?

Ans: As against the central banks inflation projection, headline inflation is already at 2.1% and I do not expect it to remain lower at this level for long. I believe that the RBI has frontloaded the interest rate cuts for this cycle; rates will remain low, and liquidity will remain abundant. While inflation projection for Q1CY26 is above 4%, we believe that unless we see big growth shocks there will be limited room for easing.

Q6. In your opinion, what could be the key triggers that might lead the RBI to consider another rate cut in the near term?

Ans: As mentioned earlier, I do not foresee further rate cuts in this year. However if the RBI was to cut rates it would be on account of a large slowdown in growth.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

Please note we have published the answers as it is received from the Fund Manager of Axis.

Mr. Shreyash Devalkar

Head - Equity, Axis Mutual Fund

With a rich experience of over two decades in the equity markets, Shreyash Devalkar is the Head – Equity at Axis AMC. He joined in 2016 as a Fund Manager and was elevated to the role in 2023. He manages some of the flagship funds at Axis AMC such as the Axis Bluechip Fund, Axis Midcap Fund, Axis ELSS Tax Saver Fund, Axis Growth Opportunities Fund, and a few more.

Prior to joining Axis AMC, he was associated with BNP Paribas AMC as a Fund Manager for more than 5 years. He has also worked as a Research Analyst at IDFC Asset Management Company (July 2008 to Jan 2011) and IDFC Securities (Sept 2005 to July 2008).

Qualification:- Chemical Engineering from UDCT, MMS Finance from JBIMS

Q1. How do you interpret the current domestic macro tailwinds in the context of ongoing global uncertainties? In your view, how is the market navigating and balancing these contrasting forces?

Ans:- In the last 3-4 months, we have witnessed markets post a sharp recovery with returns ranging above 18%-25%. FIIs returning to equities, consistent inflows from DIIs, relatively attractive valuations were the key reasons for the surge in equities. The triggers going ahead will be how the tariff scenario unfolds for India on relative basis compared to competing countries in respective goods and the ongoing earnings season. If we look at the macro factors, we stand supported by surplus liquidity and lower interest rates, our twin deficits are in control, inflation is well below RBI’s target and growth seems reasonable. Stability in currency and low inflation may offer some room for further rate cut.

Q2. With the June quarter earnings season now underway, how do you assess the performance outlook for India Inc. this quarter?

Ans:- We believe that this quarter could be in line with expectations, because earnings expectation are already cut across. Overall, the growth is still expected to be in single digits. At a sector level, banks may face a drag from NIMS given falling interest rates, automobile sector is expected to stay subdued while the pharma segment could report decent growth. Consumption companies have been a pain point however going forward this could improve if consumption rebounds. Industrials and manufacturing could do better than market expectations.

Q3. Foreign institutional investors haven’t fully returned to Indian markets yet - in your view, is it valuations or earnings that are holding them back?

Ans:- It’s a combination of two things. Higher valuations led to FIIs moving back and returning when valuations turned better, and interest rate differential compared to US. Although not out of the woods, earnings selectively may turn out to be better than expected. We believe markets are in a phase where we could see some fair amount of volatility and push and pullback from the FIIs.

Q4. We've seen a surge in new products, categories, and investment avenues. Has this led to a ‘problem of plenty’ for investors? And could passive investing offer a way to simplify decision-making?

Ans:- We believe that different investors have different choices, some choose active funds for the alpha, while other may want to just invest in passive funds for their simplicity. As markets mature, new opportunities arise and I believe investors should explore new avenues of investing. Spreading assets across products, categories and avenues can provide investors an immense wealth creation journey.

Q5. How should investors position themselves in the small and mid-cap segment? Are we seeing a meaningful improvement in profitability relative to large caps based on current data?

Ans:- Although large-cap stocks have gained favor in recent months following the sharp correction, I always believe in being invested across the market capitalisation. Many large-cap companies have shown relatively modest growth in the current cycle, making their valuations more reasonable compared to pre-COVID levels. On the other hand, sectors such as defense, power capex, tourism, and EMS are experiencing strong growth, but valuations in these areas are quite elevated. These themes are more prominently represented in mid- and small-cap segments. Therefore, it’s advisable for investors to stay invested across the market cap spectrum. However, stock selection remains critical-simply allocating across asset classes may not be enough to generate superior returns.

Q6. As a fund manager, how do you determine the right time to exit a sector-especially when it remains in favour but the fundamentals appear to be weakening?

Ans:- When fundamentals are weakening on relative basis - both in the context of valuations and compared to other sectors, it is generally time to reduce exposure, we follow this principal across market cycles.

Please note we have published the answers as it is received from the Fund Manager of Axis.

Mr. Marzban Irani

Chief Investment Officer – Fixed Income, LIC Mutual Fund

Mr. Marzban Irani is our debt market expert having rich experience of 25 years in Fixed Income. He has played a pivotal role in building LICMF’s image of Mutual Fund of investor’s choice for Debt funds. Mr Irani is a PGDBM - Chetana’s Institute of Management & Research, Mumbai. B.Com – Mumbai University.

Experience:

Chief Investment Officer Fixed Income - LIC Mutual Fund Asset Management Ltd. (w.e.f. 24/04/2019)

Fund Manager Fixed Income - LIC Mutual Fund Asset Management Ltd. (w.e.f. 04/08/2016)

VP Fixed Income - DSP BlackRock Investment Managers (Jun 2014 Jul 2016)

Senior Fund Manager Fixed Income - TATA Asset Management (Jun 2011- May 2014).

Fund Manager Fixed Income METLIFE INDIA INSURANCE (Sep 2010 May 2011)

Fund Manager Fixed Income - Mirae Asset Global Investment Mgmt India (Jan 2008 Jul 2010)

Fund Manager Fixed Income TATA Asset Management (Sep 2000- Nov 2007)

Q1. May 2025 witnessed one of the year's strongest net FPI (Foreign Portfolio Investor) inflows. What could be the reasons behind this surge?

Ans 1. Debt inflow was only 1100 cr.

Q2. How do you interpret the RBI's recent repo rate and CRR cuts? Do you believe the RBI has strategically frontloaded these measures, anticipating a surplus liquidity situation that might require further rate adjustments closer to Q4 FY26?

Ans 2. In the June 2025 policy the RBI has cut the repo by 50 bps. When the rate cut cycle started, the cut expectation was lower. In the rising interest rate scenario, the domestic rate hikes were limited unlike the US where the rates went up from almost 0 to 5%. Hence the leeway to cut was limited. Domestic inflation has bottomed out. Going ahead, there are geo- political risks. Ukraine Russia war is not yet over, the recent Iran Israel conflict is on and India has had a short war with Pakistan. Monsoon which was expected to be normal has been below expectations in the month of June. We would know by august how the monsoon has fared like spatial distribution etc. Oil prices have moved up and India being a net importer of oil has to be watchful. All these factors may pose an upside risk to inflation. Going ahead, global growth is a challenge. Also private capex needs to come up. Consumption needs a boost. Hence between growth and inflation tradeoff , the growth numbers needed a push. Hence, this was a good decision from RBI to cut rates on a proactive basis. As far as CRR is concerned, as we move into the busy season, at the time of advance tax outflow/GST outflow there can be liquidity mismatch temporarily. Hence infusion via CRR may help to balance out liquidity.

Q3. The RBI's shift from an accommodative to a neutral stance has surprised many. What do you believe is the rationale behind this change, and how do you anticipate it will impact the RBI's future projections?

Ans 3. The leeway to cut is limited. Accommodative stance indicates a cut or a pause. As the leeway to cut is not visible in the immediate future, the neutral stance was announced. As far as liquidity is concerned RBI has ensured ample liquidity with a preemptive CRR cut especially during the festive season which would help in further transmission of the rate cuts. RBI may continue to be data dependent especially on the geo political front and guidance by FED.

Q4. What does rise in US Bond Yields mean for Indian markets? Could this lead to a rotation from equities to bonds, as seen historically?

Ans 4. Decoupling has been happening in the last few years. Spread which was around 500 bps has now shrunk to around 150 bps. DE dollarization is the key thing. China has reduced US treasury holding and central banks are shifting gradually to gold reserves. Today the dollar is the reserve currency but going ahead it might lose this position. What will matter for rates in India is the stability of currency which has been largely impacted currently by the geo political scenario rather than US rates.

Q5. Are you observing a growing investor preference for Debt + Arbitrage funds? How do you assess their suitability in the current market environment?

Ans 5. From a tax perspective this product is looking good at the moment. Volatility is less. However, investors should choose to invest based on their investment horizon and risk appetite.

Q6. What factors do you anticipate will drive the Indian fixed income market in 2025?

Ans 6. In the last three years starting July 2022 where the yields almost peaked, investors in fixed income have been getting capital appreciation besides regular accrual. As we move ahead capital appreciation looks limited or flat. Hence it will be an accrual strategy. Hence investors with fixed income allocation should stick to their allocation. It’s a cycle which will change. The fiscal deficit number has been declining. The government is following a prudent path. This might lead to a global rating upgrade going ahead.

Please note we have published the answers as it is received from the Fund Manager of LIC.

Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.

Source: RBI, Bloomberg.

Disclaimer: The views expressed herein are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information / data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risk and uncertainties that could cause actual results, performance, or event to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in the future. LIC Mutual Fund Asset Management Ltd. / LIC Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investment made in the scheme(s). Neither LIC Mutual Fund Asset Management Ltd. and LIC Mutual Fund (the fund) nor any person connected with them, accepts any liability arising from the use of this document. The recipients before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY