The Present Market Scenario & Prospects
Macro Snapshot
The Sensex is up ~8.5 percent year-to-date and the Nifty has risen ~7.2 percent. The best performing sectors have been financials (+12%), IT (+9%), and consumer discretionary (+11%).
On a global level, the continued delay in rate increases by the Fed and decelerating U.S. inflation numbers have supported risk-assets.
Additionally, slightly supported oil prices, hovering between $70 and $75/bbl, have been favoring the fiscal arithmetic of India.
The reopening of China is revitalizing Asian trade since July 2025, which is promising for the export-oriented sectors of India.
Forward View
The India Equity Strategy group at Nomura says, Nifty is approaching 22,500 by the end of September as domestic consumption gains strength and company profits start to surprise.
Morgan Stanley Asia Pacific desk adds that the bank prefers to have an overweight position in Q3 in the following areas: banking and infrastructure.
Thematical and Sectoral Insights
This is not weeks of bucketting by pure market-cap, and the following are three high-conviction themes:
Play India Growth
Mid and small-cap funds that are positioned to enjoy an upturn in consumption, municipal and urban growth. E.g. HDFC mid small cap, SBI Small Cap.
Global Diversifier
Flexi-cap and multi-asset funds that have 10-15 percent offshore exposure to U.S. technology and European consumer stocks—the best way to hedge INR volatility. You can consider Axis Global Innovation Fund or ICICI Prudential Global Stable Equity.
Inflation Shield
Real asset and hybrid funds which will have the capacity to absorb commodity fluctuations. Play yield: SBI Magnum Gilt Fund gives a shot, and for a gold hedge, there is Aditya Birla Sun Life Gold Fund.
Mutual Fund Data
| Mutual Fund | 1-Year Return | 5-Year Return | Expense Ratio | Turnover Ratio | Total AUM (Cr) | Min. Investment | Top 3 Holdings |
|---|---|---|---|---|---|---|---|
| Bandhan Small Cap Fund (Direct-Growth) | 16.41% | 38.09% | 0.39% | 89.28% | 11,744 | ₹1,000 (lump), ₹100 (SIP) | Sobha Ltd (3.14%), LT Foods Ltd (2.52%), The South Indian Bank Ltd (2.38%) |
| Motilal Oswal Midcap Fund (Direct-Growth) | 11.11% | 37.81% | 0.68% | 94.86% | 30,401 | ₹500 (lump), ₹500 (SIP) | Coforge Ltd (10.13%), Persistent Systems Ltd (9.74%), Kalyan Jewellers India Ltd (8.02%) |
| ITI Small Cap Fund (Direct-Growth) | 3.83% | 30.72% | 0.56% | 125.09% | 2,504 | ₹5,000 (lump), ₹500 (SIP) | PG Electroplast Ltd (2.89%), Multi Commodity Exchange of India Ltd (2.36%), Acutaas Chemicals Ltd (2.1%) |
| Invesco India Midcap Fund (Direct-Growth) | 17.80% | 32.65% | 0.63% | 86.73% | 6,641 | ₹1,000 (lump), ₹500 (SIP) | BSE Ltd (6.12%), L&T Finance Ltd (4.35%), Prestige Estates Projects Ltd (4.18%) |
| Edelweiss Mid Cap Fund (Direct-Growth) | 11.43% | 34.83% | 0.4% | 49.68% | 10,028 | ₹100 (lump & SIP) | Max Healthcare Institute Ltd (3.35%), Coforge Ltd (3.25%), Persistent Systems Ltd (3.22%) |
| Axis Bluechip Fund (Direct-Growth) | 5.53% | 17.37% | 0.69% | 89.00% | 33,218 | ₹100 (lump & SIP) | HDFC Bank Ltd (9.02%), ICICI Bank Ltd (8.57%), Reliance Industries Ltd (6.09%) |
| Parag Parikh Flexi Cap Fund (Direct-Growth) | 12.33% | 26.46% | 0.63% | 8.67% | 1,03,868 | ₹1,000 (lump & SIP) | HDFC Bank Ltd (8.11%), Bajaj Holdings and Investment Ltd (6.87%), Coal India Ltd (5.95%) |
| Mirae Asset Large Cap Fund (Direct-Growth) | 7.99% | 20.49% | 0.54% | 16.5% | 39,530 | ₹5,000 (lump), ₹1,000 (SIP) | HDFC Bank Ltd (9.78%), ICICI Bank Ltd (7.75%), Infosys Ltd (5.67%) |
| JM Aggressive Hybrid Fund (Direct-Growth) | 2.39% | 26.92% | 0.56% | Not available | 822 | ₹1,000 (lump), ₹100 (SIP) | Financial (19.76%), Services (10.81%), Technology (9.17%) |
| ICICI Prudential BHARAT 22 FOF (Direct-Growth) | -0.81% | 33.35% | 0.12% | 29.76% | 2,358 | ₹5,000 (lump), ₹1,000 (SIP) | BHARAT 22 ETF (99.95%) |
Sector-Specialist Picks:
- Banking: SBI Banking & Financial Services Fund - tapping into the expansion of loans and increased NIMs.
- Infrastructure: ICICI Prudential Infrastructure Fund - accessing the 100 trn capex in the next 5 years.
SIP / Lump Sum Analysis
The chart below compares the performance of a ₹10,000 a month SIP at the end of 3 years with a ₹360,000 one-time investment. The comparison uses an assumed CAGR for each fund.
Key Takeaway:
- Lump-sum investment exceeds SIP returns in times when markets are trending significantly upward, as the full investment amount experiences compounding for the entire 3-year period.
- SIP helps in leveling out volatility. It can potentially provide superior risk-adjusted returns when markets are choppy or falling during a mid-cycle correction.