Mr. Dhawal Dalal

President & Chief Investment Officer - Fixed Income, Edelweiss Mutual Fund.

Mr. Dhawal Dalal has 20 years of experience and an MBA from University of Dallas (USA). Mr. Dhawal has joined Edelweiss Asset Management Limited in the year 2016. He is responsible for the overall growth of fixed income assets through a healthy mix of retail and institutional clients. Before joining Edelweiss Asset Management Limited, he was the head of Fixed Income at DSP Black Rock Investment Managers Private Limited and led a team of Fund Managers managing fixed income assets. His role there was to expedite overall growth of fixed income assets, performance and client interactions.

When not occupied with work, he loves reading on emerging trends in the global markets, geo-political developments and books on behavioral trends. He’s also a movie buff and never misses a chance to watch a blockbuster with his near and dear ones. A humble and learned person, he strongly believes that every individual should have a sense of purpose in life!

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

Q1. With a change in leadership at the US Federal Reserve expected around, how should global and Indian debt market investors think about continuity versus change in policy approach and market expectations?

Ans: Global financial markets are keenly awaiting the potential change in the thought process from the new Fed chair on their stance on inflation and the trade-off between AI-led productivity gains (which can lower inflation) and recent tariffs-led price gains (which may not have been fully passed through). The current Fed is perceived to be extra cautious on tariff-led uncertainties. If the new Fed chair can drive consensus on inflation trajectory to be lower, then Fed will be able to cut rates more aggressively. This will be bullish for global financial markets including Indian bond markets, in our view.

Q2. With the rupee experiencing phases of depreciation, how should debt mutual fund investors understand its impact on interest rates, inflation expectations, and fixed-income portfolio positioning?

Ans: INR’s recent depreciation is mainly due to FPI outflows and not due to any macroeconomic event. That said, the INR’s depreciation will have mild effect on our import basket amid the recent fall in crude oil while it will have a positive impact on our exports. As a result, the FY26 CAD is expected to be ~1% of the GDP, which will be within the tolerance zone even as the BoP will be in slight deficit for the second consecutive year. Overall, the recent move in the INR appears to be growth-supportive in our view and will not have any material negative impact on India’s growth-inflation dynamic, in our view.

Bond investors should, therefore, take advantage of the recent increase in bond yields in 2- to 3-year segment and lock in attractive rates with the investment horizon of at least one year as we expect the RBI to keep policy rates at current levels in CY2026.

Q3. With India’s inflation remaining well below the RBI’s medium-term target for an extended period, how should investors interpret this phase?

Ans: The recent decline in headline inflation in India has two main drivers – cyclical and structural. Cyclical drivers include above average monsoon for three years, lower crude oil prices and benign weather conditions. Together, they have contributed to lower food and energy prices which form the bulk of our inflation basket. Structural drivers include declining trend in nominal GDP growth, improvement in logistics, storage & transportation and maturing consumption patterns.

Taking all these together, we believe that India’s headline inflation is likely to experience lesser volatility as compared to the past and will likely remain in a range of 2% to 5% going forward.

Lower average inflation is relatively good for the investor in general as aggregate savings rate may improve.

Q4. Given that the FY27 fiscal deficit target is marginally lower, but gross market borrowings remain high, how do you see the net impact on long-term bond yields?

Ans: While FY27 gross borrowing is higher, the net borrowing is comparable to FY26 net borrowing. We believe that the bond market will have to reconcile this difference going forward as IGB maturities will rise every year going forward.

That said, we expect GOI’s debt to GDP ratio to gradually trend lower towards 50% by FY31 as highlighted in the new framework in the Union Budget. A lower government borrowing is always good news for the bond market. A declining trend in the government borrowing, overall improvement in fiscal health and strong & sustained economic growth in the next five years should lead to a gradual decline in bond yields barring any unexpected event risk, in our view.

Q5. Following the recent Union Budget’s increase in STT on F&O transactions, there has been discussion around its potential impact on arbitrage fund strategies. How do you assess this change, and what should investors understand about its implications for arbitrage funds?

Ans: Assuming there is no revision in the Budget proposal of revision in STT on F&O transactions, we expect a mild impact of ~30 bp on the annualized returns of arbitrage funds.

We believe that risk-reward ratio is still in favor of the investors of arbitrage funds on tax-adjusted basis as compared to other investment opportunities in the current market conditions.

Q6. What is your in-house credit research process? How do you assess a company's ability to pay, beyond just relying on external credit ratings?

Ans: Our credit assessment framework is based on multiple drivers such as analysis of key macro-economic factors, analysis of the sector followed by the analysis of the borrower.

Analysis of the macro-economic factors include analysis of the current fiscal landscape, monetary policy landscape, overall credit environment, current regulatory landscape, analysis of the banking system and overall term structure of rates

Our sector analysis includes the fiscal health of the sector, recent profitability trends, analysis of the dominant player & his pricing power, regulatory landscape pertaining to the sector, capacity utilization etc.

Analysis of the borrower includes deep dive into financial health, profitability trends, free cash flow, borrowing trends, quality of the leadership, their reputation and their business acumen, shareholding structure, trend in the market cap etc.

A thorough analysis of these factors provides us with a good understanding of the credit and the drivers of their underlying credit rating. We also continuously monitor the diversification of bond holders, recent trends in credit spreads, secondary market liquidity in bonds of the underlying credit and any material development either at the sector level or at the borrower level.

Source: Internal Research
Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Mr. Trideep Bhattacharya

CFA, President & Chief Investment Officer - Equity, Edelweiss Mutual Fund

Mr. Trideep Bhattacharya has a PGDBM in Finance from SP Jain Institute of Management & Research, Mumbai, a CFA charter holder and a B.Tech degree in Electrical Engineering from IIT Kharagpur. Mr. Trideep brings with him over two decades of experience in equity investing across Indian and global markets. Prior to joining Edelweiss AMC, he played a key role in building a market-leading PMS business at Axis Asset Management Company, where he served as Senior Portfolio Manager – Alternate Equities. He has also worked with reputed global institutions like State Street Global Advisors and UBS Global Asset Management in London, UK. Mr. Trideep is also a member of the Capital Markets Policy Council, a distinguished body instituted by the CFA Institute to guide its advocacy team on current and emerging policy issues impacting global capital markets. When not immersed in market trends and investment strategies, Mr. Trideep enjoys playing tennis, bridge, and experimenting with musical instruments.

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

Q1. With India strengthening its global trade position through deeper engagement with the EU and a potentially more favourable tariff environment with the US, how do you assess the long-term impact of these developments on Indian equities and corporate competitiveness?

Ans: The recently concluded FTAs, along with the lowering of tariffs on exports to the US, augur well for Indian corporate earnings, as sectors such as textiles, pharmaceuticals, chemicals, aviation, and auto components stand to benefit from improved export opportunities. As India becomes more competitive relative to its peers, we expect a compression of the external risk premium, which in turn is likely to enhance foreign investor appetite and further improve the equity outlook.

Q2. There have been discussions around intermittent FII outflows from India, often attributed to factors such as currency movements, relative growth triggers, and tax considerations. How do you assess these concerns, and what could emerge as the next key triggers for renewed FII interest in Indian equities?

Ans: The recent FII outflows reflect a slowdown in India’s corporate earnings, driven by elections, higher interest rates, fiscal prudence, and prolonged monsoons. This coincided with near-term investment opportunities in the US (higher interest rates), Brazil (higher commodity prices), South Korea (an improved outlook for defence and electrical equipment), and China (favourable valuations).

However, over the medium to long term, India’s GDP growth outlook remains structurally strong. With a revival in corporate profitability and a tariff reset, we expect revival in FII interest going forward.

Q3. While large-cap equities have seen a relatively stronger recovery, mid- and small-cap segments have lagged. Do you believe valuations in the broader market still warrant caution, or are selective opportunities beginning to emerge as we look ahead?

Ans: Despite the time correction, Indian markets continue to trade above historical averages. However, with the expected improvement in corporate profits driven by a tariff reset, FTAs, and lower interest rates, we expect earnings to catch up with valuations going forward.

While the valuation premium to emerging markets remains elevated, it has corrected meaningfully over the past two years. This provides an opportunity for FIIs, whose current ownership in Indian equities stands below historical norms. Mid-caps offer the best risk-reward play, while small caps require a selective, bottom-up approach.

Q4. Multi-asset allocation funds have seen strong inflows over the past year. Do you believe this is largely driven by the recent performance of commodities within these portfolios, or does it reflect a deeper, structural shift in investor thinking around risk–return balance and diversification?

Ans: Recent inflows into multi-asset allocation funds have been driven by the recent performance of commodities and further amplified by the underperformance of Indian equities. However, we believe that, over the long term, equities provide better risk-adjusted and sustained returns. Commodity cycles remain volatile and relatively less predictable.

While multi-asset allocation funds do offer a balanced risk-return profile and diversification over the long term, sustained investor interest remains a function of the commodity cycle.

Q5. In equity mutual fund investing, periods of temporary underperformance are inevitable. How should investors evaluate such phases, and what role does patience play in achieving long-term outcomes?

Ans: The foundation of long-term wealth building lies in belief in the power of compounding, discipline in systematic investing, and the conviction that equities provide better long-term, risk- and inflation-adjusted returns. One’s conviction is often tested during periods of underperformance and sharp market declines.

History suggests that such periods present an opportune time to accumulate, given favourable valuations. Hence, patience remains the most important virtue in equity investing and long-term wealth building.

Q6. If SIPs are meant to counter behavioral biases in mutual fund investing, what single habit should investors adopt in the new year to improve long-term outcomes?

Ans: In the world of social media and influencers, investors are often swayed by advice that is either poorly timed or driven by malafide intent. Additionally, apps that provide real-time portfolio updates can amplify fear and trigger behavioral biases.

While it is difficult to completely avoid such influences, investors should remain focused on their long-term needs. Investors should align their return objectives with risk tolerance after discussion with their advisors.

Source: Internal Research
Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Mr. Alok Singh

Chief Investment Officer - Fixed Income, Bank of India Mutual Fund.

Mr. Alok Singh is a Postgraduate in Business Administration from ICFAI Business School and a CFA with over 24 years of experience in Fund Management. He has a wealth of experience and impressive track record in fund management both for residents as well as for overseas investors. In the past, Alok has won numerous awards for stellar fund performance during his career span. Alok heads the overall Equity & Fixed Income Investment Operations for Bank of India Investment Managers as Chief Investment Officer. Alok’s remarkable achievement includes growing the company’s Assets Under Management from ₹100 crore to approximately ₹12,000 crore since his joining in April 2012.

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

Q1. The US Federal Reserve has signaled a data-dependent stance despite recent rate cuts. Given this cautious approach, do you see the risk of Fed policy surprises impacting global bond markets, and how are you factoring this uncertainty into your Indian debt positioning?

Answer: We believe that while the US Federal Reserve has adopted a data-dependent approach to assess the need for further rate cuts, the scope for policy surprises appears limited. The US economy is already facing its own growth challenges, which the Fed is likely to support through accommodative measures. This backdrop should continue to encourage the Reserve Bank of India to maintain a growth-supportive stance, provided inflation remains benign.

Q2. With the yen near historic lows and carry-trade risks rising, how could a sudden unwind impact Indian debt markets, FX volatility, and investor flows?

Answer: We see minimal risk of any significant impact from changes in yen carry trade on Indian debt markets. This is primarily because the majority of Indian debt is held domestically, with only a small fraction owned by foreign investors. Even within that limited foreign exposure, the inclusion of Indian bonds in global bond indices is expected to broaden the investor base and enhance stability, rather than trigger large outflows. However, a very high FX volatility may force RBI to harden the interest rate, though currently that situation has very low probability.

Q3. With the rupee hitting new lows against the dollar, how are you managing currency risk in your debt portfolio, particularly for overseas or hedged instruments?

Answer: We currently don’t have overseas exposure in the debt portfolio hence there is no direct risk.

Q4. With higher LCR buffers becoming effective from April 2026, what implications do you foresee for the demand–supply dynamics at the front end of the G-Sec curve? Could banks’ increased appetite for short-tenor securities distort pricing or crowd out other investors over time?

Answer: We do not expect the implementation of higher LCR buffers to have any significant impact on the yield curve, as we anticipate that the government’s issuance calendar will likely be adjusted to accommodate this incremental demand. Furthermore, the market’s depth and flexibility should help absorb these changes without causing distortions in pricing or crowding out other investors

Q5. As retail investors and digital platforms gradually open access to corporate bonds, do you expect this to alter liquidity, secondary-market depth, and price-discovery dynamics? Could this lead to a more stable bond ecosystem?

Answer: Digital platforms are playing an important role in addressing structural challenges in the debt market, particularly around secondary market depth and price discovery. However, their impact so far remains limited, and significant progress is still required for meaningful market transformation. With the right regulatory support and continued technological innovation, these platforms have the potential to substantially improve transparency, liquidity, and accessibility—ultimately resolving many of the issues faced by retail investors in the debt market.

Q6. What is your in-house credit research process? How do you assess a company's ability to pay, beyond just relying on external credit ratings?

Answer: We have a robust in-house credit research process designed to assess a company’s ability to generate sufficient cash flows to service its debt obligations. While external credit ratings serve as an initial reference point, our evaluation goes much deeper. We analyze factors such as business model sustainability, industry dynamics, liquidity position, leverage ratios, and management quality. This comprehensive approach ensures that we identify potential risks early and maintain a high level of credit discipline across our portfolios.

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.

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