Excerpts:
Q. Let’s start with the markets. 2025 has been tough for Indian equities, while commodities like gold and silver have done well. What’s your take on Sensex and Nifty?
Chirag Muni: As you rightly mentioned, global uncertainties—tariffs, geopolitical tensions, and wars—have kept markets on edge. Gold and silver have performed well because they are sentiment-driven assets. Gold demand rises in uncertain times, with central banks like India and China buying to diversify from the dollar. Silver’s demand is partly industrial, for EVs, solar panels, and semiconductors.Equities, however, historically deliver better long-term returns. Over a five-year horizon, Nifty has given more than 10% returns 82% of the time, whereas gold and silver range between 40–50%. Despite global uncertainties, the Indian market has cushioned itself. From a long-term perspective, this presents an opportunity rather than a risk.
Q. Could Trump’s 100% tariff on drugs affect mutual funds in the pharma sector?
Chirag: The tariff mainly affects branded and patented drugs, not generics, which constitute most Indian exports to the U.S. Mutual fund exposure to pharma is around 8–9%, so overall impact is limited. Specialty drugs might see some effect, but it’s not a major long-term concern.
Q. How should investors approach the rest of 2025?
Chirag: The market has undergone price and time corrections. From a peak of 26,000 last year to a low of 22,000, and now back to 25,000, it’s an opportunity. Long-term investing is driven by macro factors, and India’s fundamentals remain strong: GDP growth around 6.5%, low inflation at 2.1%, and interest rates already cut by 100 bps. Valuations are fair, and earnings are expected to rebound.
From a short-term perspective, FIIs have been selling, but DIIs and retail SIPs continue to provide liquidity. This makes it a favorable environment for investors with a 3–5 year horizon. The one-year forward PE suggests the market could reach 26,500–27,000 by year-end, implying a potential 10–11% return.
Q. Quant funds have not been performing well. What’s happening with Quant Mutual Funds?
Chirag: Quant faced challenges last year due to regulatory investigations and market conditions, which limited fund manager flexibility. However, negative news is mostly cleared, and recent performance has improved. Quant Largecap, in particular, is showing strong recovery due to its flexible, data-driven investment approach.
Q. For long-term investors, how should they approach the market now?
Chirag: Avoid chasing themes or timing the market. Focus on diversified funds:
- 55–60% largecap
- 20–25% midcap
- 15–20% smallcap
Funds to consider include DSP Large & Midcap, Kotak Midcap Fund, Invesco Smallcap, HDFC Flexicap, and ICICI Prudential Focused Equity. A basket of these four to five funds, with a 4–5 year horizon, provides diversification and long-term growth potential. Lump-sum investments are fine after a market correction, as short-term volatility will smooth out over time.
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