Road Ahead: Markets, Risks & Opportunities | Mirae Asset Mutual Fund

ELI5/TLDR

A Mirae Asset monthly webinar where three fund managers — equity, fixed income, commodities — take stock of a rough patch for India. The economy has slipped from the world’s fourth-largest back to sixth, foreigners have pulled $40bn+ out of Indian stocks in 18 months, the rupee keeps weakening, and a fresh Middle East flare-up has pushed crude up. Their collective message: the structural India story is intact, the global AI trade is real but pricey, and the main near-term risk is how long the Gulf conflict keeps oil elevated. The reflex line, repeated by all three: markets are slaves to earnings — sit tight, stay diversified.

The Full Story

The setup: India having a bad year, the rest of the world having a party

The framing is unusually candid for a fund house. India has gone from “strength to strength” to a stretch where it lost its fourth-largest-economy spot and got passed on market cap by Taiwan and Korea. Foreign portfolio investors sold more than $40bn of Indian equities over 18 months. The rupee keeps sliding. Crude is back up because of a US–Iran confrontation around the Strait of Hormuz. Against that, the US, Korea and Taiwan markets are ripping on AI.

So the webinar is really one extended answer to: should you panic, and where do you put money.

Equity (Gaurav Mishra, head of equity)

His base case is bleak-but-livable. Treat geopolitical disruption as permanent furniture, not a passing storm. Whoever controls a choke point — tariffs, rare earths, the Strait of Hormuz — will use it. Two near-term worries: a prolonged Iran–US standoff feeding oil-driven inflation, and richly valued global AI markets that could drag everything down if they correct. His counter is that India is a “good-quality anti-AI trade” — it barely participates in the AI run-up, so it has less to give back.

On earnings, the just-concluded Q4 FY26 season was unremarkable: roughly two-thirds of companies in line or ahead, one-third soft. Large caps grew earnings in the low double digits; midcaps and smallcaps did better (mid-teens revenue, 20%+ earnings). Pharma and a few conglomerates like Reliance dragged. The forward number matters more — large-cap earnings growth sits around 14.5–15%, with cuts so far minimal.

“If there’s a 20-percentage-point increase in crude, if $70 was the initial base… the hit to earnings would have been 150 basis points.”

In other words, sustained $85 oil knocks roughly 1.5% off earnings growth — annoying, not fatal. The crucial caveat: this time underlying demand looks genuine (credit growth climbing from sub-10% toward 14–16%, benign asset quality, robust real estate and auto volumes), unlike post-Covid when price hikes met dead demand and destroyed volumes.

On where the house leans: private banks (cheap, improving), “platform companies” (the unorganised-to-organised shift — quick commerce, fintech, insurance distribution, broking, discretionary retail from eyewear to cosmetics), telecom, insurance, and an overweight in pharma CDMO and specialty chemicals. He’s trimmed metals. For a 3–5 year horizon he suggests something like 40–45% large cap, 35–40% mid, 20–25% small — tilted more toward mid and small than a Nifty 500 benchmark would be.

Fixed income (Basant, head of fixed income)

The most substantive section, and the most genuinely informative. His thesis: the real story isn’t rates, it’s foreign exchange. FPI debt flows have dried up, FDI has been muted for years, and external commercial borrowing (ECB) became uneconomic — once you add India’s ~100bp sovereign risk premium plus ~3.5% hedging cost to a US rate, offshore borrowing cost overseas companies ~70bp more than just borrowing from Indian banks. So corporates abandoned offshore and bond markets, piled into bank loans, and bond spreads blew out.

RBI’s June policy was a coordinated FX rescue. The government scrapped withholding tax on capital gains and interest for foreign holders of government bonds — important less for immediate flows than for clearing the path to global bond-index inclusion (potentially $20–25bn). RBI added several near-term levers: cut the exporter hedging window from 15 to 9 months, and — the big one — offered to subsidise hedging costs (he estimates ~150bp), which flips foreign borrowing from more expensive than domestic to cheaper. It also said it would bear the hedging cost on FCNR(B) deposits, making NRI dollar deposits yield north of 8% — above domestic fixed deposit rates.

“Whoever can make should make use of this window while available… because your overall holding period returns will be significantly higher given rupee having a depreciative bias.”

That window runs only to September. The market reaction was telling: government bond yields barely moved (4–6bp) but corporate bond yields fell 15–25bp across the curve, because the package targets exactly the spread that had blown out.

His global call cuts against consensus: the next move from major central banks (Fed, BoE, ECB, Canada, Australia) is a hike, not a cut. Growth is resilient, but no advanced economy has gotten inflation back to 2%, and the next US print is expected above 4%. India, by contrast, has inflation projected at 5.1% for FY27 — inside the 4–6% band even with fuel price pass-through. His curve advice: don’t extend duration, because the corporate bond curve has gone flat-to-inverted, so there’s no carry reward for taking duration risk. Stay in the 1–3 year part; the 30–40 year government bond is tactically interesting on wide spreads but he wants to see structural demand first.

Commodities and global (Siddhartha Shivas)

Gold and silver corrected despite geopolitical risk — counterintuitive, but explained by extreme prior run-ups (gold +60–80%, silver ~+150% in a year), profit-booking, rotation into AI, a stronger dollar (index ~99), and higher US yields (bad for non-yielding metals). He expects range-bound, volatile prices. Tactical entry points he names: silver ~70, gold ~4400–4500. Long-run return expectations he’d anchor on: ~14% gold, ~12% silver — explicitly warning against expecting last year’s numbers again. The house’s gold-and-silver fund-of-fund is 60/40 gold/silver, tilted to silver on import-restriction-driven local premium.

On global, his pitch is diversification by exposure type: India is a bet on a billion-person consumption-plus-manufacturing economy; global is a bet on disruptive tech — AI, defence tech, space, tokenisation. And the global AI run-up, unlike a bubble, is backed by hard earnings. His printed numbers: Nasdaq 100 EPS up 35% last year, projected +42%; Korea’s KOSPI EPS up 69% projected +160%; SK Hynix and Samsung quarter-on-quarter profit growth of 165% and 144%, with next-12-month projections above 200%. Micron +163% q/q, Nvidia +34% with +53% projected.

“Markets in the long term are slaves of only one thing, which is earnings.”

The whole webinar leans on that one sentence. The caveat he offers: Broadcom just fell ~15% in a day on guidance, so the path is volatile even if the trend holds.

Indian thematic picks: clean energy/renewables, defence (long-term), metals (a global super-cycle, but be cautious starting new positions), and a newly launched high-dividend equity product (~40% energy, ~20% metals, ~25% IT, ~3.5% yield) he calls his top pick.

The Q&A coda

Gaurav makes the contrarian case for Indian IT services: the narrative has turned so against them — assumed to be AI losers — that they’ve de-rated to attractive valuations and dividend yields. His argument is that AI expands the addressable market but enterprise adoption lags far behind consumer adoption, and someone has to do the hand-holding implementation (security, regulation, integration) that AI firms alone can’t cover. He invokes prior survived shifts — Y2K, the move to cloud, SAP migration — where IT services were written off and came back. On gold EGRs (NSE’s new electronic gold receipts), Siddhartha is dismissive on liquidity grounds and notes funds aren’t currently permitted to hold them anyway.

Key Takeaways

India has slipped from the world’s 4th-largest economy to 6th; Taiwan and Korea overtook it on market cap. FPIs sold $40bn+ of Indian equities over 18 months.
Rule of thumb on oil: a 20-percentage-point rise in crude (e.g. $70 → $85 sustained) cuts large-cap earnings growth by ~150bp.
Q4 FY26: ~2/3 of companies in line/ahead. Large-cap earnings low-double-digit; mid/smallcap stronger (mid-teens revenue, 20%+ earnings). Pharma and Reliance dragged. Forward large-cap growth ~14.5–15%.
Credit growth rising from sub-10% toward 14–16%, broad-based, with benign asset quality — taken as evidence demand is genuine, unlike the post-Covid price-hike-meets-dead-demand episode.
The real macro pressure point is FX, not rates. ECB borrowing had become ~70bp more expensive offshore than domestic bank loans, pushing corporates into bank credit and blowing out bond spreads.
RBI’s June FX package: scrapped withholding tax for foreign govt-bond holders (opens path to index inclusion, ~$20–25bn potential), cut exporter hedging window 15→9 months, ~150bp hedging-cost subsidy (flips offshore borrowing to cheaper than domestic), and bears FCNR(B) hedging cost — making NRI dollar deposits yield 8%+. NRI window closes September.
Market reaction to the policy: govt bond yields moved 4–6bp; corporate bond yields fell 15–25bp — confirming the package targeted the blown-out spread.
Contrarian rate call: next move from Fed/BoE/ECB/Canada/Australia expected to be a hike, not a cut — inflation stuck above 2%, next US print expected >4%. India inflation projected 5.1% for FY27, inside the band.
Fixed-income positioning: corporate bond curve is flat-to-inverted, so no carry reward for duration. Stay 1–3 year; 30–40yr govt bond tactically interesting on ~70bp spread vs 25–30bp a year ago.
Gold and silver corrected despite geopolitics — driven by prior run-up (gold +60–80%, silver ~+150% in a year), profit-booking, rotation into AI, stronger dollar, higher US yields. Realistic long-run returns: ~14% gold, ~12% silver.
Global AI earnings cited: Nasdaq 100 EPS +35% (proj +42%); KOSPI +69% (proj +160%); SK Hynix/Samsung q/q profit +165%/+144%, projected >200%; Micron +163% q/q; Nvidia +34% (proj +53%).
Equity allocation suggestion for 3–5 years: ~40–45% large, ~35–40% mid, ~20–25% small — more mid/small-tilted than a Nifty/BSE 500 benchmark.

Claude’s Take

This is a fund house talking its own book, and you should read it as such — but it’s an unusually honest version of the genre. The opening admission that India has slipped to sixth-largest and been overtaken on market cap is not the sort of thing most AMC marketing leads with. The recurring “markets are slaves of earnings” line is the giveaway tell: it’s true enough to be unfalsifiable and convenient enough to justify staying invested through anything. Every section ends at the same destination — long horizon, stay diversified, keep your SIP going — because that destination is where the AMC’s revenue lives.

The promotional framing is mostly soft-pedalled but present: Siddhartha plugging the gold-silver FoF, the GIFT City AIQ fund, and especially the “newly launched high-dividend ETF… it’s in fact my top pick” — that last one is a product pitch wearing an analysis costume. Gaurav’s IT-services rehabilitation is a coherent contrarian argument, but notice it conveniently supports a sector the house is presumably positioned in; the Y2K/cloud/SAP analogy is real history but also exactly what you’d say to talk up a beaten-down holding.

The fixed-income section is the part worth keeping. Basant’s walk-through of why FX (not rates) is the binding constraint, the ECB-vs-bank-borrowing arithmetic, and the mechanics of RBI’s hedging-cost subsidy is genuinely educational and harder to fake — those are specific numbers with internal logic, and the corporate-bond-yields-fell-while-govvies-didn’t observation is a clean confirmation of his thesis rather than a vibe. The contrarian central-bank-hike call is also a real, checkable position rather than a hedge.

Scoring it a 6. Above-average for the format — candid framing, one section of real substance, specific numbers throughout — but it’s still a monthly sales webinar where the conclusion was written before the questions, and the equity and commodity sections shade into product placement. Useful as a snapshot of how a large Indian AMC was reading June 2026 (Hormuz risk, the FX squeeze, the AI-trade-vs-India dichotomy), less useful as independent analysis.