Senior fund manager Asit Bhandarkar from JM Financial Asset Management has identified selective value opportunities emerging in high-quality IT companies, suggesting a potential gradual recovery for the sector despite not anticipating a sharp rebound. In an exclusive interview, Bhandarkar shared comprehensive insights about market performance, investment approaches, and foreign institutional investor behavior.
Market Outlook for FY26: Cautious Optimism Prevails
When questioned about market performance for the remainder of fiscal year 2026, Bhandarkar expressed cautious optimism. Several supportive factors include reset valuations, revived corporate earnings particularly in mid-cap segments, resilient macroeconomic conditions, healthy domestic liquidity, and continued government capital expenditure momentum, though at a slowing pace.
However, the expert also highlighted potential challenges that investors should monitor closely. Rapid sector rotation and the impact of evolving trade policies represent significant factors that could influence market dynamics in the coming months.
Navigating Market Volatility: Investment Strategy Recommendations
Addressing concerns about market volatility driven by US tariffs and geopolitical tensions, Bhandarkar recommended maintaining balanced allocation with emphasis on quality investments and earnings visibility. He advised using staggered entry approaches to manage volatility effectively while focusing on domestically driven sectors to counter potential external shocks.
The fund manager emphasized the importance of diversification across market capitalizations to capture selective opportunities while avoiding extreme positioning. Sticking to long-term asset allocation discipline remains crucial in the current market environment according to his assessment.
Equity Mutual Fund Flows: October 2025 Analysis
Recent AMFI data revealed a significant 19% decline in equity mutual fund inflows during October 2025, dropping from ₹30,421 crores in September to ₹24,690 crores in October, representing a decrease of ₹5,731 crores. Bhandarkar attributed this reduction to reduced gross sales combined with increased redemptions.
The outflows were particularly noticeable in value, large-cap, and mid-cap categories. Interestingly, the flexicap category demonstrated resilience with inflows of approximately ₹1,900 crores in October, contrasting sharply with negative inflows of ₹650 crores in September.
Despite the overall decline, equity new fund offers showed remarkable strength, gathering assets under management of nearly ₹4,173 crore through six NFOs in October, with flexicap category attracting significant interest. This represents a substantial increase from September 2025 when equity funds raised only ₹729 crores.
Retail Investor Influence and IT Sector Assessment
Bhandarkar acknowledged the growing impact of retail investors on the mutual fund industry, noting that SIP-led inflows have created stable, long-term demand. Their preference for transparency, digital accessibility, and simpler products is reshaping industry priorities toward building trust and promoting financial education.
Regarding the IT sector, the expert confirmed that valuations have corrected to reasonable levels while deal pipelines in cost optimization and AI-driven transformation provide medium-term support. Selective value is emerging in high-quality names with strong order books and substantial enterprise exposure, though he anticipates a gradual recovery rather than a sharp rebound.
Foreign Institutional Investor Trends and Reversal Expectations
Addressing the significant bearish stance of FIIs on Indian equities since July, Bhandarkar identified potential catalysts for trend reversal. Easing geopolitical tensions and normalization of trade relationships could drive foreign portfolio investment flows back to Indian markets. Additionally, global rate cycles turning decisively lower might facilitate this shift.
India's resilient economic growth, corporate earnings turnaround, and political stability continue to serve as strong structural attractions for foreign investors according to the JM Financial expert. These fundamental strengths position India favorably for renewed FII interest once global conditions stabilize.
