Expert view: Selective value emerging in high-quality IT names, says JM Financial's senior fund manager

Expert view: Asit Bhandarkar, Senior Fund Manager - Equity, JM Financial Asset Management, believes selective value is emerging in high-quality IT names. He, however, does not expect a sharp rebound but sees the chances of a gradual recovery. In an interview with Mint, Bhandarkar shared his views on market outlook, investment strategy, and FIIs. Here are edited excerpts of the interview:

How do you see the market performing for the rest of FY26? Is the worst over?

The reset in valuations, the revival of corporate earnings, particularly in the mid-cap segment, resolute macroeconomic conditions, healthy domestic liquidity, and continued albeit slowing capital expenditure momentum from the government are factors that may support a cautiously optimistic market outlook. However, rapid sector rotation and the impact of trade policies are factors to look out for.

From US tariffs to geopolitical tensions, it is tough to navigate market volatility. What should be our investment strategy at the current juncture?

Maintain a balanced allocation with a tilt towards quality and earnings visibility, while using a staggered entry to manage volatility. Focusing on domestically driven sectors could help offset external shocks, and keeping portfolios diversified across market caps ensures participation in selective opportunities. Avoid extreme positioning and stick to long-term asset allocation discipline.

AMFI data showed inflows into equity mutual funds declined by 19% in October 2025. What are the fine prints of the data that caught your attention?

Flows in the equity category have decreased by ₹5,731 crores (19% drop) from ₹30,421 crores in September 2025 to ₹24,690 crores in October 2025, due to a double whammy of reduced gross sales and increased redemptions.

The outflow is primarily seen in the value, large-cap and mid-cap categories. Flexicap category is one of the few categories which has seen inflow close to ₹1,900 crores in October 2025, against a negative inflow of ₹650 crores in September 2025.

However, the equity category did see increased flows through new fund offers (NFOs). Equity NFOs in October gathered AUM of close to ₹4,173 crore through 6 NFOs, with the flexicap category seeing significant inflows. This represents a significant increase from September 2025, when equity funds had raised ₹729 crores.

How do you see the emergence of retail investors? How are they shaping the mutual fund industry?

The rise of retail investors has significantly broadened market participation, with SIP-led inflows creating a stable and long-term demand base.

Their preference for transparency, digital access, and simpler products is reshaping the industry's mission towards building trust, promoting financial education, and designing products with investors in mind.

Retail flows now serve as a powerful counterbalance to the volatility of foreign institutional investors (FIIs).

What is your take on the IT sector? Do you see value emerging in it?

Valuations have corrected to a reasonable level, and deal pipelines in cost optimisation and AI-driven transformation offer medium-term support.

Selective value is emerging in high-quality names with strong order books and large enterprise exposure. A gradual recovery rather than a sharp rebound appears likely.

FIIs have been significantly bearish on Indian equities since July this year. When do you expect the trend to reverse? What can drive them back to the Indian equities?

An easing of geopolitical tensions and normalisation of trade relationships may lead to a reversal of foreign portfolio investment flows. Global rate cycles turning decisively lower may also assist the shift.

India's resilient economic growth, corporate earnings turnaround and political stability remain strong structural draws.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.