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Saturday, February 28, 2026

Newspaper Summary 010326

 

IT slump pushes 3-year SIP returns into red

The relentless sell-off in Indian IT stocks has begun to materially impact systematic investment plan (SIP) outcomes of sector-focussed mutual funds. A bl.portfolio analysis of actively managed IT funds shows that, as of late February, 3-year SIP returns have slipped into the negative territory — the first such instance since the pandemic-led disruption of early 2020.

However, the current phase is not comparable with 2020. During the Covid pandemic, the entire market corrected sharply. This time, the Nifty 50 is only about 4.3 per cent below its all-time high, while the Nifty IT index is 33.5 per cent off its peak. In fact, three months before SIP returns turned negative in April 2020, average three-year returns were still in double digits, slipping only after the Covid-driven market crash.

The average 3-year SIP XIRR for IT funds now stands at -1.6 per cent compared with -7.1 per cent for the Nifty IT TRI, ACEMF data shows. In contrast, the broader Nifty 50 TRI has delivered a positive 9.1 per cent, underscoring the sharp divergence between sectoral and diversified exposures. A little over 4 years back, the 3-year SIP XIRR for IT funds was as high as 56.6 per cent.

Over the past year, 3-year rolling SIP returns have steadily compressed, reflecting earnings downgrades, slowing US discretionary technology spending, pricing pressures and the uncertainty around AI-led disruption.

Of the 13 active IT sector funds, five with over nine years of track record were considered for detailed comparison. On a 3-year SIP basis (as of February 27, 2026), Franklin India Technology Fund and SBI Technology Opportunities Fund delivered marginally positive returns of 1–2 per cent. Meanwhile, Aditya Birla SL Digital India, Tata Digital India, and ICICI Prudential Technology Fund posted negative returns ranging from 1.4 to 5.2 per cent.

CHANGE IN EXPOSURE

A comparison of IT allocations between January 2025 and January 2026 across 373 actively managed equity-oriented schemes shows four funds — including Samco Flexi Cap, Motilal Oswal ELSS, Motilal Oswal Large and Midcap, and Samco Dynamic Asset Allocation Fund — fully exiting IT exposure.

As many as 18 schemes reduced exposure by over six percentage points, including Helios Flexi Cap, Helios Large & Mid Cap, and Groww Multicap Fund, indicating proactive risk management amid expectations of demand slowdown and valuation compression. Conversely, several funds maintained elevated exposure. Motilal Oswal Midcap, Motilal Oswal Flexi Cap, and Quantum Value held IT allocations of 17-19.5 per cent as of January 2026. Funds such as ICICI Pru Value, Motilal Oswal Balanced Advantage, Mahindra Manulife ELSS, and ICICI Pru Focused Equity increased exposure over the past year — a positioning that may weigh on near-term performance amid the sector’s correction.

BIG CHANGES

Within the 39 IT stocks analysed, fund managers displayed selective conviction. Holdings in Mastek rose 250 per cent, while exposure to Newgen Software and CE Info Systems increased 60-70 per cent.

In contrast, aggressive cuts were visible in high-beta names such as Nazara Technologies (Active funds' holdings down by 82 per cent), Tata Technologies (down by 74 per cent), Zaggle (down by 61 per cent) and Tata Elxsi (down by 60 per cent).

GAP WIDENS. The broader Nifty 50 TRI returned 9.1%, highlighting the sharp divergence between sector-focussed and diversified funds.


US, Israel launch major attack on Iran; Tehran hits back at US bases in region

Press Trust of India | Dubai

The US and Israel launched a major attack on Iran on Saturday, and President Donald Trump called on the Iranian public to “seize control of your destiny” by rising up against the Islamic leadership that has ruled the nation since 1979. Iran retaliated by firing missiles and drones towards Israel and the US military bases in the region.

Some of the first strikes on Iran appeared to hit areas around the offices of Supreme Leader Ayatollah Ali Khamenei. Smoke could be seen rising from the capital as part of strikes that Iranian media said occurred nationwide.

KHAMENEI ‘ALIVE’

It was not immediately clear whether the 86-year-old leader was in his offices when the attack occurred. Iranian Foreign Minister Abbas Araghchi told NBC News that Khamenei and President Masoud Pezeshkian are alive “as far as I know”.

“When we are finished, take over your government. It will be yours to take. This will be probably your only chance for generations,” Trump said in a video announcing “major combat operations”. “For many years, you have asked for America’s help, but you never got it”. Israeli Prime Minister Benjamin Netanyahu echoed that, saying, “Our joint operation will create the conditions for the brave Iranian people to take their fate into their own hands”.

The strikes during the holy fasting month of Ramadan opened a stunning new chapter in the US intervention in Iran and marked the second time in eight months that the Trump administration has used military force against the Islamic Republic.

DEMS RUE ACTION

Democrats decried that Trump had taken action without Congressional authorisation. Hakeem Jeffries, the top House Democrat, said that though Iran is a “bad actor,” the President must nonetheless “seek authorisation for the preemptive use of military force that constitutes an act of war”.

Tensions have soared in recent weeks as American warships moved into the region. Trump said he wanted a deal to constrain Tehran’s nuclear programme at a time when Iran is struggling with growing dissent following nationwide protests. The immediate trigger for Saturday’s strikes appears to be the unsuccessful latest round of nuclear talks.

Iran responded to the latest strikes as it had been threatening to do for months, including by launching missiles and drones targeting Israel as well as strikes targeting US military installations in Bahrain, Kuwait and Qatar. “The time has come to defend the homeland and confront the enemy’s military assault,” Iran’s Foreign Ministry said on X.

FLIGHTS CANCELLED

In an indication of the scope of the conflict, flights across the Middle East were disrupted and air defence fire thudded over Dubai, the commercial capital of the United Arab Emirates. Shrapnel from an Iranian missile attack on the capital of the UAE killed one person, state media said.

Trump had threatened military action, but held off, following Iran’s recent crackdown on protests spurred by economic grievances and evolved into a nationwide, anti-government push against the ruling clerics. The Human Rights Activists News Agency says it confirmed more than 7,000 deaths in the crackdown and that it is investigating thousands more; the government has acknowledged more than 3,000 killed.

Iran had hoped to avert a war, but maintains it has the right to enrich uranium and does not want to discuss other issues. The strikes could rattle global markets, particularly if Iran makes the Strait of Hormuz unsafe for commercial traffic. A third of total worldwide oil exports transported by sea passed through the strait in 2025.


Micron opens world’s largest semicon clean room at Sanand; ships first DRAM module to Dell

Avinash Nair | Ahmedabad

India marked a historic moment in its semiconductor journey on Saturday, as Micron Technology began operations at its Sanand ATMP facility in Gujarat and shipped out its first DRAM module to Dell Technologies from a 500,000 sq ft raised-floor clean room, the largest of its kind in the world.

“This is India’s first advanced memory ATMP site. It houses a 500,000 sq ft clean room — the largest single raised-floor clean room for semiconductor assembly anywhere in the world,” said Manish Bhatia, Executive Vice-President. The facility was engineered specifically for Sanand’s soil and climate conditions to prevent moisture-related risks.

The clean room is Class 1000 — meaning no more than 1,000 particles per cubic meter. The facility turns over the air twice per minute, or 120 times per hour. “ICs and the gold bonding wires we handle are thinner than fractions of a human hair. Even a single particle can impact yield or reliability,” Bhatia said.

$2.7-B MEMORY BET

The facility will assemble the non-volatile storage used in SSDs and computing devices. On Saturday, Prime Minister Narendra Modi inaugurated the plant, which represents India’s first advanced memory ATMP facility. The total planned investment across Phase-1 and 2 is $2.7 billion.

“Today, we are making our first revenue shipment — a finished DRAM module for personal computing — to Dell. We will also supply global customers, including Asus and Qualcomm, among others,” Bhatia said. He added that nearly half of the plant’s 1,300-strong workforce are fresh engineering graduates from Gujarat and neighbouring States.

Prime Minister Modi described the facility as a symbol of India–US cooperation in AI and chip technology, predicting it will catalyse a high-tech industrial ecosystem in the region similar to Sanand's transformation into an automotive hub. US Ambassador Sergio Gor added that this represents "India’s entry into the global semiconductor supply chain as a manufacturing nation".


Strait of Hormuz disruption can send crude soaring; impact 2.6 mb/d of India’s imports

Rishi Ranjan Kala | New Delhi

The escalating conflict between Iran and the US, which is now spreading across West Asia, is fuelling fears of a blockade of the world’s most critical energy choke point — the Strait of Hormuz. Such a disruption threatens around 2.6 million barrels per day (mb/d) of India’s crude oil imports.

ICRA points out that roughly 50 per cent of India’s crude oil and 54 per cent of liquefied natural gas (LNG) imports were routed through the Strait of Hormuz in FY25.

IMMEDIATE HIT

The situation poses an immediate risk to India and global oil markets, as the 2.6 mb/d of crude transit primarily comes from Iraq, Saudi Arabia, the UAE, and Kuwait. Industry experts noted that for India, any blockade would translate into higher import costs, freight and insurance spikes, potential short-term supply tightness, and pressure on producers (including Iran) regarding uninterrupted export revenues.

RISING CRUDE PRICES

Prashant Vasisht, Senior VP and Co-Group Head, Corporate Ratings at ICRA, warned that while Indian refiners could source crude from alternative locations such as the US, Africa, and South America, the resulting elevated energy prices could lead to a soaring import bill. Additionally, high crude prices would moderate the marketing margins and profitability of domestic oil marketing companies.

Experts like Ritolia suggested that diversification options for India include increasing sourcing from Russia to mitigate the impact of the disruption.


Getting started: All about investing for resident Indians and NRIs via Gift City IFSC

By Venkatasubramanian K | bl. research bureau

Think of Singapore, Dubai or even Morocco and their image as world-class financial hubs is matched by the sheer number of global majors making their presence felt in these cities and their special economic zones. In addition, these cities and economic zones also happen to be tax havens or low-tax regions making them all the more attractive for global investors and financial institutions to set up and run operations, given the ease of laws applicable.

To replicate at least a part of this success in a more light-touch regulations and moderate tax environment, the Indian government conceived the Gujarat International Finance Tec-City (Gift City) in 2015. Located between Ahmedabad and Gandhinagar, Gift City has two broad business regions – a domestic tariff area for business related to India operations and a multi-service special economic zone (SEZ). This multi-service SEZ spans two main entities – a notified international financial services centre (IFSC) and IT & ITES, support services export.

The IFSC is a hub of fintechs, asset management companies (AIF, PMS), banks, fund houses, stock exchanges, depository participants, and settlement firms allowing for a wide swathe of inbound and outbound investments. As of late 2025, Gift City had almost $30 billion in assets and commitments from 65 different jurisdictions and $100 billion in banking assets. It is envisaged as a jurisdiction that provides financial services to non-residents and residents in any currency other than the Indian rupee. All entities in the IFSC are regulated by a unified regulator, the International Financial Services Centres Authority (IFSCA), which combines the powers of the RBI, SEBI, PFRDA, and IRDAI.

OPTIONS OPEN FOR RESIDENT INDIANS

For resident Indians seeking overseas equity exposure via Indian mutual fund houses investing in global feeder schemes (the US, Europe, etc.), there is a key problem of positioning. Since investments in feeder fund of funds are restricted to $7 billion at an industry level, most of these schemes remain shut for fresh subscriptions or SIPs. This limit set by the RBI in 2008 has not been revised since then.

The choice that residential investors have is to use the LRS (liberalised remittance scheme) of the RBI for outbound/overseas investments. Resident Indians are allowed to remit up to $250,000 in a financial year per person for buying shares, properties, etc., abroad. For such investors, Gift City offers a wide array of choices from stocks, ETFs, domestic fund houses that invest in US stocks, and PMS (portfolio management services) with international investments.

SETTING UP TO INVEST

Before starting, you must first complete the KYC (know your customer) process, open a demat account, and start a new bank account. As a resident Indian, you will need your PAN, Aadhaar, passport, proof of address, and bank statement as common documentation.

The process is currently a mix of physical and digital; you have to send a scanned copy of various forms and self-attested proofs via e-mail. Your onboarding is usually done within 48 hours, though you may need to send physical copies if video KYC is not done. All main public and private sector banks (like SBI, HDFC, ICICI, etc.) and larger brokers (like Zerodha, Angel One, INDmoney, etc.) have a presence in Gift City via subsidiaries. Once accounts are established, you can transfer rupees from your Indian account to the Gift City account, where it gets converted to US dollars for transacting.

BUYING OVERSEAS STOCKS

India’s leading exchanges BSE and NSE have subsidiaries in Gift City: India INX (BSE) and NSE IX (NSE). These exchanges already have back-end tie-ups, so you do not need additional foreign brokerage accounts.

  • India INX offers global equities and ETFs from 135 exchanges worldwide, along with derivatives and international bonds.
  • NSE IX recently expanded its offerings with a platform giving access to 30 global markets.
  • Both offer unsponsored depository receipts that mimic underlying shares, including fractional US shares, which allow for part ownership of high-priced stocks for a smaller price. A few hundred to a few thousand dollars are typically enough to buy stocks or ETFs.

FUNDS, PMS, AIF INVESTING OVERSEAS

Several Indian mutual fund houses like DSP, PPFAS, and Tata have rolled out schemes in Gift City investing in indices like the Nasdaq 100 and S&P 500. Minimum investments for these funds range from $500 (Tata) to $5,000 (DSP, PPFAS).

In the case of PMS and AIFs, the minimum investment is generally $75,000, though some can be higher. For instance:

  • Marcellus Global Compounders Portfolio (PMS) asks for $150,000 for non-accredited investors and $25,000 for accredited investors.
  • Mirae Asset Global Allocation Fund (Category III AIF) demands $151,000 for non-accredited and $10,000 for accredited investors. "Accredited investors" are defined by SEBI as those with high net worth (at least ₹7.5 crore with ₹3.75 crore in financial assets).

TAXES TO CONSIDER

Resident Indian investors face various levies:

  1. TCS: Remittances over ₹10 lakh in a year for buying overseas stocks attract a 20 per cent Tax Collection at Source (TCS), which can be claimed as credit during IT returns filing.
  2. LTCG: Gains on US stocks, ETFs, or depository receipts held for more than two years are taxed at 12.5 per cent (total 14.95 per cent with cess/surcharge).
  3. STCG: Gains on holdings of less than two years are taxed at your marginal slab rate.
  4. Dividends: US authorities apply a 30 per cent withholding tax, and Indian depository entities may deduct an additional 10 per cent service charge. Dividends are then taxed at your marginal slab rate.
  5. Mutual Funds/AIFs: In these cases, the funds pay the taxes themselves. For gains beyond two years, the rate is 12.5 per cent (14.95 per cent total); short-term gains are taxed at 42.74 per cent, and dividends at 35.88 per cent. The declared NAV is net of these taxes.

DISCLOSURES AND ADVANTAGES

All Gift City income and gains must be reported in your income tax returns under Schedule FA (foreign assets). Non-disclosure can invite penalties of up to ₹10 lakh.

The Gift City advantage lies in its one-stop ecosystem of banks, brokers, and funds. Crucially, there is no securities transaction tax (STT), no commodities transaction tax (CTT), no GST on brokerages, and no stamp duty on trades. Since transactions happen in foreign currency, investors also worry less about rupee depreciation.

SWEET DEALS FOR NON-RESIDENT INDIANS

The advantages of Gift City are more tilted towards NRIs. NRIs, PIOs, and foreign nationals can invest in India and elsewhere via the hub.

  • Currency: Unlike NRE accounts (denominated in INR), Gift City accounts are in US dollars or other overseas currencies, allowing NRIs to invest straightaway without currency conversion.
  • Access: NRIs have access to outbound products as well as 22-hour trading on exchanges for India-specific indices (Nifty 50, Sensex) and over 200 single-stock futures.
  • Concessional Taxation: Short- or long-term capital gains on stocks or derivatives are taxed at a concessional rate of 9 per cent. Dividends are taxed at a lower rate of 10 per cent. Income from Gift City funds does not suffer TDS for NRIs and OCIs.

For resident Indians, the goal of Gift City investing should be diversification and goal-based planning, such as funding a child's overseas education or buying property abroad. Ideally, it is most suited for HNIs and UHNIs.


The HYPE and SUBSTANCE of a ‘blog post’ that shook software stocks

By Nishanth Gopalakrishnan | bl. research bureau

Citrini who? Why are markets reacting to a ‘blog post’? These were some of the questions floating around when news emerged last Monday that an article published by Citrini Research added fuel to fears of how AI will devour the value of software stocks. An over 7,000-word essay titled ‘The 2028 Global Intelligence Crisis’ and defined as ‘A Thought Exercise in Financial History, from the Future’ is set in an apocalyptic June 2028 and seeks to warn of an unpleasant scenario that could play out if AI is allowed to grow unhinged.

As software stocks in India and globally got rattled, questions emerged on whether there was an attempt at market manipulation, though these remain unsubstantiated. However, the report was deemed important enough for responses from the top echelons of global finance. Federal Reserve Governor Christopher Waller disagreed with the extreme job-loss scenario, while Citadel Securities published a counter. Deutsche Bank, using its own in-house AI, termed it a "work of persuasive, emotional rhetoric disguised as a financial memo".

Despite the criticism, the fact that software stocks continued to slide makes the report important to consider. Here are the five key themes from the note:

1. END OF WHITE-COLLAR JOBS

Citrini bases its arguments on the fall of the white-collar job market, contemplating a scenario where AI operates independently without human oversight. It suggests that a single GPU cluster in North Dakota generating the output of 10,000 workers is an "economic pandemic" rather than a panacea.

This disruption begins with agentic coding tools in late 2025, impacting SaaS companies like Salesforce. By 2028, Fortune 500 clients may develop in-house software powered by AI, gutting the pricing power of SaaS firms. Furthermore, as clients cut white-collar labour, the number of per-employee software licences (like Slack) will plummet. This creates a "feedback loop" with no natural brakes: AI replaces workers, companies reinvest savings into better AI, leading to more layoffs. This spreads to legal, accounting, and auditing sectors, eventually causing discretionary consumption to lose its status as the top contributor to US GDP.

2. DEATH OF INTERMEDIATION

The report discusses businesses that solve consumer "friction" through intermediation, such as job portals, real estate marketplaces, or online travel agents. Citrini predicts that AI agents will soon scour the internet to bring tailored deals across all services, disrupting apps people are currently habituated to. Metrics like "average lifetime value" will no longer make sense. Additionally, AI agents may prefer stablecoins (like USDC) for payments because they cost virtually nothing, potentially ending the dominance of Visa and Mastercard.

3. PRIVATE CREDIT CRISIS

Failing SaaS companies could trigger a domino effect in the $2.5-trillion private credit market. Many leveraged buyouts (LBOs) were done at exorbitant valuations assuming perpetual mid-teen growth. By 2027, life insurers could become casualties if private credit firms default, especially since many alternative asset managers have used policyholders’ premiums to fund these private credit deals.

4. MORTGAGE CRISIS

If white-collar workers lose their earning power, the $13-trillion US mortgage market faces a crash as property prices collapse due to lack of demand. Citrini notes this crisis would differ from 2008: back then, loans were "bad on day one" due to poor underwriting. In 2028, the most prime of borrowers—the "bedrock of credit quality"—would be the ones defaulting. Delinquencies might take time to show as borrowers live off savings and credit cards first, but the pattern would be discernible through rising credit card debt.

5. ROLE OF THE STATE

Governments will face a shrinking revenue base as income and consumption taxes dwindle. Labour’s share of GDP could crash to 46 per cent (from 56 per cent in 2024), while jobless claims spike. The State may be forced into uncharted waters, such as taxing AI inference compute or taking stakes in AI companies to fund transfers to displaced workers.

Our take on the report and its aftermath

Citrini’s note is not perfect and should not be treated as a definitive forecast, but it successfully alerted the market to the exponential strides of AI. For instance, the ongoing rout in Indian software stocks might have been less damaging to portfolios if investors were more open to the view that AI could be detrimental to the IT services business model.

Flaws in the report:

  • It ignores a scenario where empowered workers co-exist with AI, becoming 10x or 20x more productive.
  • It doesn't account for massive pushback from governments and stakeholders.
  • It assumes stablecoins will become legal tender despite central bank concerns.

An interesting counter from Citadel Securities notes that if the marginal cost of compute rises above the marginal cost of human labour, substitution will not occur, creating a natural economic boundary.

Ultimately, while the reality of 2028 may differ, the report highlights that things are changing fast—evidenced by fintech company Block recently laying off 40 per cent of its workforce due to AI. Citrini’s purpose was to grab attention and offer an alternative perspective, and on that count, it deserves a 10 on 10.


How mutual funds played asset classes

By Dhuraivel Gunasekaran | bl. research bureau

ASSETS-WISE. We analyse allocation preferences between January 2025 and January 2026.

The Indian mutual fund industry’s assets under management (AUM) grew 20 per cent year-on-year to ₹80.8 lakh crore as of January 31, 2026, from ₹67.3 lakh crore a year earlier. The expansion was powered largely by robust net inflows of ₹9.4 lakh crore across categories. Equity schemes led with ₹3.7 lakh crore of net inflows, followed by debt funds at ₹1.9 lakh crore and hybrid funds at ₹1.7 lakh crore. Against this backdrop, portfolio holdings across asset classes witnessed meaningful shifts. Our analysis compares month-end disclosures between January 2025 and January 2026 to assess how allocation preferences evolved.

For the one year ended February 25, 2026, benchmark returns remained divergent: Nifty 100 TRI gained 15 per cent, Nifty Midcap 150 TRI rose 20 per cent, while Nifty Smallcap 250 TRI and Nifty Microcap 250 TRI returned 12 per cent and 6 per cent, respectively.

LARGE-CAP STOCKS

Large-cap holdings of mutual funds rose 22 per cent to ₹32.7 lakh crore in the year ended January 2026, the strongest growth among market-cap segments. Amid volatility and valuation concerns in broader markets, fund managers gravitated towards large-caps, offering earnings visibility and relative valuation comfort.

Notably, large-caps were the only market-cap category to increase their share in overall MF equity exposure, from 40.2 per cent to 40.5 per cent. HDFC Bank, ICICI Bank and Reliance Industries remained the top allocations at ₹3.3 lakh crore, ₹2.6 lakh crore and ₹1.8 lakh crore, respectively. In contrast, IRFC, Mazagon Dock Shipbuilders and Lodha Developers saw significant reductions in exposure.

MID-CAP STOCKS

Mid-cap allocations grew per cent to ₹10.1 lakh crore (approximate value based on context), broadly mirroring the 20 per cent return delivered by the Nifty Midcap 150 TRI. Allocation growth remained measured rather than aggressive, suggesting disciplined positioning despite strong index performance.

Funds increased exposure in the past year to improving mid-sized industrial, financial and capital goods names including Indian Bank, Nippon Life India AMC, GE Vernova T&D India, SAIL, APL Apollo Tubes, NALCO and Laurus Labs. Top mid-cap holdings include Max Healthcare, Tube Investments and Indian Hotels.

SMALL- & MICRO-CAPS

Small-cap holdings rose 20 per cent to ₹5.37 lakh crore, despite the Nifty Smallcap 250 TRI delivering a relatively moderate 11.7 per cent return. SIP inflows continued to support allocations. In contrast, micro-cap holdings saw a sharp decline of 18 per cent to ₹1.4 lakh crore, while the Nifty Microcap 250 TRI returned just 6 per cent. Stocks ranked beyond the top 500 by AMFI are considered as micro-caps.

Compared with large- and mid-caps, the small- and micro-cap segments saw relatively slower growth, reflecting valuation fatigue, liquidity tightening and rising risk aversion. Among small-caps, Cholamandalam Financial Holdings, Radico Khaitan and KPR Mill saw fresh scheme additions. In micro-caps, Equitas Small Finance Bank, Metropolis Healthcare and Ujjivan Small Finance Bank feature prominently in portfolios.

OVERSEAS EQUITIES

Domestic mutual funds’ overseas holdings expanded 26 per cent to ₹1.03 lakh crore from ₹81,925 crore a year ago, outpacing most domestic equity segments. The rise, however, largely reflects mark-to-market gains rather than incremental capital deployment, given the industry-wide $7 billion overseas investment cap.

For the year ended February 25, 2026, global markets delivered strong returns — S&P 500 rose 16 per cent (USD), Shanghai Composite gained 26 per cent (CNY), and Nikkei 225 surged 54 per cent (JPY). Importantly, the RBI cap applies to capital deployed and not to market value, allowing AUM to appreciate without breaching limits.

DEBT

Long-term debt allocations increased a modest 5 per cent to ₹10.8 lakh crore, while money market instruments and short-term debt grew 11 per cent to ₹10.1 lakh crore. The divergence reflects a duration recalibration. Early 2025 positioning was tilted towards longer duration to capture anticipated rate cuts. As easing expectations moderated and bond yields remained range-bound, managers shifted towards shorter-duration papers to manage interest rate risk.

GOLD AND SILVER

Precious metals emerged as standout performers. Gold holdings surged 257 per cent to ₹1.9 lakh crore alongside an 81 per cent rise in the MCX Gold Index. Silver allocations soared 744 per cent to ₹1.2 lakh crore, supported by a 172 per cent rally in the MCX Silver Index. Both price appreciation and fresh ETF launches drove growth, particularly in silver from a low base.

Gold retained its status as a strategic hedge amid global uncertainty and central bank buying, while silver gained traction as a tactical play benefiting from both precious and industrial demand themes.

REITS AND INVITS

MF exposure to REITs climbed 46 per cent to ₹21,218 crore, aided by both mark-to-market gains and incremental allocations. Embassy Office Parks REIT, Brookfield India Real Estate Trust and Mindspace Business Parks REIT delivered 21–33 per cent returns over the past year. SEBI’s decision to classify REITs as equity for mutual fund scheme categorisation expands their eligibility within equity schemes, potentially improving liquidity and institutional participation.

In contrast, InvIT holdings remained flat at ₹5,803 crore. Although select trusts such as Cube Highways Trust, IndiGrid Infrastructure Trust and Nexus Select Trust generated healthy market returns, InvITs continue to be treated as hybrid assets, limiting broader equity scheme participation.

CASH

Cash levels in active equity funds declined in percentage terms from 5.7 per cent to 4.9 per cent, even though absolute cash rose marginally. Sustained SIP inflows of nearly ₹28,000 crore flowed into the markets, keeping deployment active.

KEY TAKEAWAY: Large-caps were the only market-cap category to increase share in overall MF equity exposure, from 40.2% to 40.5%.


Real Returns: Resetting retirement targets and making them achievable

By Aarati Krishnan | Contributing Editor

Young Indians looking to make a start on retirement savings often get a rude shock when they learn the amount of money they need to save to retire. Financial planners and online calculators come up with eye-popping numbers when you seek estimates of a target corpus.

For instance, a 30-year-old looking to retire at 60 may find that she needs a ₹20-crore or ₹21-crore corpus to retire. To get to this sum, systematic investment plan (SIP) calculators show she will need to invest ₹58,038 a month in equity SIPs for the next 30 years. Such targets look so outlandish to some folks that they completely give up on thinking about retirement and put off investing indefinitely.

But not thinking about retirement, or not saving for it, are the worst personal finance decisions you can make. Therefore, we decided to look at how you can trim those retirement targets and make them more achievable.

BUILT ON ASSUMPTIONS

Before taking a dive into the numbers, it is important to understand that the retirement targets thrown up by financial planners or calculators are not cast in stone. They are guesstimates built on several assumptions.

Usually, to arrive at a retirement target, calculators use six variables: your starting age, your retirement age, your longevity, inflation rate, portfolio returns before retirement, and portfolio returns after retirement. In deciding the size of the corpus you need, some variables have more influence than others.

For instance, 30-year-old Sarala, with expenses of ₹1 lakh a month at today’s prices, wants to retire at 60. To estimate her target corpus, the calculator assumes a 12 per cent return on her investments until 60, a 6 per cent return from age 60 to 90, a 6 per cent inflation rate, and a longevity of 90 years. The target corpus it throws up is ₹20.28 crore. To get there with a fixed monthly SIP, she needs to put aside ₹58,038 monthly for the next 30 years.

CORPUS TWEAK

In reality, even small tweaks in these assumptions can substantially trim the required corpus.

  • Inflation: If Sarala faces 5 per cent inflation instead of 6 per cent, her required corpus drops dramatically to ₹13.3 crore from ₹20.28 crore. As the Indian economy matures, it is possible that inflation rates will trend down.
  • Post-retirement Risk: If Sarala earns 7 per cent on her post-retirement portfolio instead of 6 per cent, she can get by with ₹17.6 crore. By switching from a fully debt portfolio to one with about 20 per cent equities, she may be able to achieve this.
  • Longevity: Trimming the longevity assumption from 90 to 85 sharply reduces the target to ₹16.9 crore.

However, it pays to be conservative in financial planning, so it makes sense to budget for higher inflation and longevity rather than underestimating them.

INVESTMENT SIZE

If Sarala is clever, she can leave the target corpus unchanged and play around with the size of SIPs.

  • Starting Early: If she starts at 25 instead of 30, she can reach ₹27.1 crore by age 60 with a SIP of ₹42,209. Advancing a SIP start by five years can boost the final corpus by 86 per cent.
  • Retirement Age: Postponing retirement by five years to 65 allows her to manage with SIPs of ₹35,287 a month.
  • Better Returns: Managing 13 per cent instead of 12 per cent during her working life trims the required SIP amount by 21 per cent.

STEP UP YOUR SIP

Calculations often assume your SIP remains flat for 30 years. However, stepping up your SIPs as your income rises can help you reach tall targets.

  • A ₹30,000-SIP started at 30 with a 12 per cent return will yield just ₹9.96 crore by 60 if kept flat.
  • But if you increase that same SIP by 10 per cent every year, you reach a corpus of ₹23.95 crore in the same time.

In your 30s and 40s, income often expands faster than spending, sharply boosting your saving ability—provided you don’t upgrade your lifestyle faster than your income.

TAKE NOTE

  • Don't let tall retirement targets scare you.
  • Start early in equities and remain on track.
  • Step up your investments as your needs grow.

REAL RETURNS. Not thinking about retirement, or not saving for it, are the worst personal finance decisions you can make.


‘With Micron’s Sanand facility, India now part of global chip supply chain’

Our Bureau | Ahmedabad

Prime Minister Narendra Modi on Saturday said the launch of Micron Technology’s first phase of $2.75 billion ATMP (Assembly, Test, Marking and Packaging) facility in Gujarat strengthens India’s role in the global technology and semiconductor value chain, signalling a new era of strategic cooperation with the US.

“The beginning of commercial production at Micron’s ATMP plant will strengthen India’s role in the global technology value chain. Today, India is moving rapidly in becoming a part of a global semiconductor value chain,” Modi said while addressing a formal event held at Micron’s facility at Sanand, about 40 km from Ahmedabad.

The Prime Minister described the Micron facility as a symbol of India–US cooperation in AI and chip technology. He emphasised that the ATMP plant is part of a broader government vision to build a pan-India semiconductor ecosystem. Drawing a parallel with Sanand’s transformation into an automotive hub after the arrival of Tata Motors, Modi said the Micron plant is expected to catalyse a similar high-tech industrial ecosystem in the region.

INDIA ENTRY

US Ambassador to India Sergio Gor, at the inauguration, reinforced the geopolitical and economic significance of the facility. He said India’s emergence as a semiconductor manufacturing hub is “not just welcome, but essential”. “As other nations aggressively expand production of legacy chips and seek to dominate the sector, India offers a secure and reliable alternative. Today marks India’s entry into the global semiconductor supply chain as a manufacturing nation. This is just the beginning,” he added.

“This facility represents the future. It represents American technology leadership working hand-in-hand with India’s manufacturing excellence. It represents supply chain resilience built on trust between our two great democracies,” the diplomat added.

Sanjay Mehrotra, Chairman, President and CEO of Micron Technology, noted that the groundbreaking ceremony for the ATMP plant was held in September 2023. “We poured enough concrete to fill 100 Olympic-sized swimming pools; used steel enough for building 3.5 Eiffel Towers and the backbone trusses that make this clean room weigh 24,000 elephants,” Mehrotra said while speaking at the launch ceremony.


Brace for further fall

Gurumurthy K | bl. research bureau

US MARKET OUTLOOK. Geopolitical tensions can knock down US indices.

The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite indices have been struggling over the last few weeks to see a rise. The indices moved up in the first half last week but failed to sustain. They fell in the second half, giving away all the gains.

The US confirming its attack on Iran can weigh on the sentiment. It can drag the benchmark indices lower on the back of high risk-aversion.

DOW JONES (48,977.92)

The index is struggling to rise above 50,000. The price action on the daily chart indicates a possible head and shoulder formation, which is a bearish pattern. A fall below 48,650 will confirm the same, which in turn can drag the Dow down to 48,200 or 47,900 in the coming weeks.

A sustained rise above 50,000 is needed to get some breather. Only then the upside will open to see 51,000 and higher levels, but such a rise looks unlikely at the moment.

S&P 500 (6,878.89)

A break below 6,700 is coming. Such a break can drag the S&P 500 index down to 6,630–6,600 going forward. To avoid the aforementioned fall, the index has to sustain above 6,800. If it does, then it can oscillate between 6,800 and 7,000 for some time.

NASDAQ COMPOSITE (22,668.21)

The index has been stuck between 22,250 and 23,320 over the last three weeks. There is no change in the broader view; the outlook remains negative. Strong resistance is in the 23,000–23,300 region, which is continuing to hold well. The NASDAQ Composite index can fall to 21,900–21,600.

The index has to breach 23,300 to get some breather and go up to 24,000. However, as mentioned last week, the index has to rise past 24,000 to strengthen the bullish trend.

DOLLAR INDEX

The dollar index moved between 97 and 98 all through last week, which leaves the near-term picture unclear. It will be critical to see how the greenback reacts to the US attack on Iran. When the Russia-Ukraine conflict began, the dollar index fell initially but later started to move up. If this repeats, the dollar index can fall to 96 or even 95 first in the coming weeks. Thereafter it can see a fresh rise back towards 97–98 or even 100 eventually. On the other hand, if the index sustains above 97 this week and goes above 98.20, then that could be bullish, potentially rising to 99.50–100 from here itself.

TREASURY YIELD

The US 10Yr Treasury Yield (3.95 per cent) has a very crucial support at 3.93 per cent. A break below will be quite bearish, potentially dragging the yield down to 3.6 per cent in the coming weeks. Such a fall in the yield will be negative for the dollar index as well; if the yield declines below 3.93 per cent, the dollar index can go to 96–95 initially and then rise back again.

CRUCIAL SUPPORT. The US 10Yr Treasury Yield has a crucial support at 3.93 per cent which has to hold to avoid more fall.

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