In conversation with Satish Ramanathan, CIO - Equity, JM Financial Asset Management Ltd

How do you expect India Inc’s Q1FY26 earnings performance, and do you believe it could provide enough momentum for markets to scale new highs?

We expect Q1FY26 to show improvement as we are seeing a gradual recovery in earnings momentum. We have seen two quarters of sequential growth after five consecutive quarters of declining momentum. In the recent past, earnings have been impacted by weak domestic demand, slow government capital expenditure, and external trade disturbances. With benign inflation and improved liquidity, we expect the improvement to sustain. As regards markets, we need to be aware that FPIs are still tentative, and markets seem to be dependent on inflows from mutual funds and domestic funds.

Are there any sector rotation opportunities you’re exploring, especially with the monsoon underway and the festive season approaching in the latter half of FY26?

Current markets are volatile and experiencing rapid sector rotation, which is not sustainable. We prefer to take a longer-term view on earnings growth of underlying companies that we invest in. The general expectations are that with improved liquidity and a good monsoon forecast as also benign inflation, consumer sentiment might revive. There are also some signs that government spending is reviving, and corporate capital expenditure is expanding.

What measures have you taken to safeguard your portfolio amid past geopolitical tensions, and what’s your strategy to navigate such risks in the future?

The geopolitical risk continues to remain a key challenge. However, to safeguard the portfolio, we are maintaining a diversified portfolio across segments and sectors with a bias towards growth.

Amid market uncertainty and news of fund houses building cash buffers, have you adjusted your cash allocation recently, or do you prefer to stay invested through market swings?

We generally do not maintain high levels of cash and prefer to stay invested across market cycles.

With inflation cooling, interest rate cuts being announced, a relatively strong rupee, and ongoing oil price volatility, how do you expect these trends to shape market sentiment and direction in India?

We believe these recent developments could be positive for both the economy and markets. A strong rupee and lower crude prices are beneficial to consumption. A strengthening currency is detrimental to exports in the short term but helps contain inflationary pressures. All of these factors point to improved liquidity and growth prospects.

How would you define your core investment philosophy, and in what ways does it shape your fund management decisions?

We continue to follow our GeeQ philosophy of earnings - Growth in Earnings with Earnings Quality. We believe that in the medium term, this offers a sustainable paradigm for capital appreciation for investors. Our investment process closely monitors long-term and short-term growth prospects of a firm and its capital efficiency to decide whether it merits being in the portfolio.

What could be the rationale behind the timing of the company’s decision to launch its Large & Mid Cap Fund?

The Large and Midcap index covers the top 250 companies, which covers 82 per cent of India’s market capitalisation and 93 per cent of overall profits. The scheme could benefit from the stability that Large-Cap companies offer and growth prospects of midcap companies, offering investors a well-rounded portfolio. We believe that this scheme can become one of the core holdings of an investor’s portfolio. We are excited by the prospects of this fund.