Based on the source material from the July 26, 2026, edition of BusinessLine Portfolio, here is the reproduction of the article titled "The many routes to alpha" (which appears under the main headline "The many routes to PMS"):
The many routes to alpha
DEEP DIVE. PMS investing is primarily a manager-selection decision, not merely a choice between strategies. Here’s a peek into the PMS industry, where we analyse 530 SEBI-registered portfolio managers.
PMS IN BRIEF
- PMS is designed mainly for affluent investors, family offices, and institutions seeking a separately managed account rather than units in a pooled fund.
- Minimum investment: ₹50 lakh.
- Direct ownership: Securities are generally held in the investor’s individual account and cash remains in a designated bank account.
- Discretionary PMS: The manager makes and executes investment decisions on the client's behalf.
- Non-discretionary PMS: Transactions require the client's approval.
- Advisory PMS: The manager gives advice, while the client makes and executes the decisions.
- Customisation varies: Many providers run model strategies, although PMS can offer more flexibility than standardised mutual fund categories.
Introduction
Portfolio Management Services (PMS) managers have greater freedom to run concentrated portfolios than though standard benchmark outperforming diversified mutual fund strategies. AM portfolio analysis of 554 active PMS strategies shows that category-average returns beat the relevant benchmarks in three of the six equity categories examined over five years. Mid-cap stood out as a challenging segment, as no manager managed to surpass the Nifty Midcap 150 TRI. Multi and Flexi-cap PMS fared better, with one in three in the first age and about 2 out of 3 strategies in the second beating the Nifty 500 TRI.
The wide gap between category averages and the best-performing managers carries a second message. PMS investing is primarily a manager-selection decision, not merely a choice between strategies. A concentrated portfolio can produce excess returns (alpha) when the manager is right, but it can significantly underperform when the manager's selection calls go wrong.
As of June 2024, India had 530 SEBI-registered portfolio managers. The industry’s total assets under management managed ₹30.8 lakh crore (excluding EPFO assets) across discretionary, non-discretionary, and advisory services.
How We Did It
The Association of Portfolio Managers in India (APMI) lists about 1,370 PMS strategies, including active and inactive offerings. This Portfolio analysis uses PMS Bazaar data covering 554 active model portfolios or primary strategies across 15 categories.
Equity strategies were assessed on five-year returns ended June 30, 2024. Debt, multi-asset, MF-PMS and arbitrage strategies were ranked on three-year returns because only a few offerings in these segments had a five-year track record. Performance is reported using the Time-Weighted Rate of Return (TWRR), which is designed to separate the manager's investment performance from the timing of client cash flows.
Cost and Tax
Before we delve into PMS performance, understand three important things.
- Fees: Total expenses for a PMS can reflect the full cost of PMS investing. A fixed fee (usually 1.5–2.5 per cent), performance-linked (20 per cent above a hurdle rate), or hybrid structures.
- Tax: A portfolio churn can create tax even without a withdrawal. In an equity mutual fund, tax generally arises when the investor redeems units. In a PMS, securities are bought and sold in the client’s own account. Portfolio churn can, therefore, crystallize short- or long-term capital gains even when the client has not withdrawn money.
- Transparency: Reporting similar mutual funds can deliver different post-tax results.
PMS Performance
Here is how categories performed:
- Large-cap: Large-cap PMS strategies produced a mixed result. The category delivered an average annualised return of 10.4 per cent over five years, slightly ahead of the Nifty 100 TRI’s 10.3 per cent.
- Large and mid-cap: The large and mid-cap category returned an average 13.4 per cent a year, trailing the Nifty LargeMidcap 250 TRI’s 14.5 per cent.
- Mid-cap: Mid-cap was the weakest equity PMS category in the study; its five-year average annualised return of 12.8 per cent trailed the Nifty Midcap 150 TRI’s 18.3 per cent.
- Small-cap: The small-cap category returned an average 19.1 per cent a year, beating the Nifty Smallcap 250 TRI’s 16.8 per cent.
- Multi-cap and flexi-cap: Broadly better performing, these 106 strategies delivered an average annualised return of 14.8 per cent, outperforming the Nifty 500 TRI’s 12.3 per cent.
Beyond Pure-Equity PMS
- Multi-asset: Multi-asset PMS strategies can move dynamically across equities, debt, gold and silver exchange-traded funds, and permitted overseas funds.
- Debt: Yield-oriented debt PMS strategies may pursue capital appreciation, regular income or yield enhancement, with materially different profiles for interest rate, credit, concentration and liquidity risk.
- PMS-The Layered structure: MF-PMS offerings manage portfolios made up entirely of mutual funds for affluent investors who want professional asset allocation, fund selection and rebalancing.
What SEBI’S July 2026 proposals could change
SEBI’s July 23, 2026 consultation paper proposes a wider investment framework for PMS providers. These are proposals, not final rules.
Key proposed changes include:
- Expanded Investment Scope: If adopted, discretionary PMS managers could invest in to-be-listed securities, allocate up to 10 per cent of client assets to investment-grade unlisted debt, and access specified overseas equities, debt securities, and funds, subject to applicable limits and explicit client consent.
- MF-PMS and Non-Discretionary Framework: A framework has also been proposed for non-discretionary only PMS or MF-PMS. Such portfolios could invest in the direct plans of mutual funds, ETFs, and specialised investment funds.
- Lower Entry Barrier: The minimum investment client count could be reduced from ₹50 lakh to ₹25 lakh, which would widen access to mass-affluent investors.
- Fee Adjustments: PMS-level (re-)load provisions may be waived to avoid double charging.
- Leverage and Exposure: The proposed development is expected to take total exposure of up to 1.25 times client AUM, including limited leverage through listed options and exposure with explicit client consent.
- Portability: Easier demat-account portability between different PMS providers has also been suggested.
How investors should evaluate a PMS
Here are some important ways with which PMS returns can be assessed:
- Start with the return that remains after every cost: Compare performance after management fees, performance fees, operating expenses and transaction charges. A strategy that marginally beats an index before these costs may leave the individual investor worse off than a low-cost passive alternative.
- Prefer consistency over one point-to-point CAGR: A five-year CAGR can be dominated by the starting and ending dates. If possible, examine three- and five-year rolling returns, the proportion of periods in which the strategy beat the benchmark and whether outperformance persisted under the same portfolio manager and investment process.
- Measure the pain taken to earn the return: Maximum drawdown, downside capture and recovery time reveal risks hidden by an annualised return. A concentrated strategy may outperform over a full cycle but expose the investor to losses that are difficult to tolerate or recover from.
- Check concentration, turnover and category drift: Study the top-five and top-10 holdings, sector concentrations, cash allocation and annual portfolio turnover. Also check whether the present portfolio still resembles the stated strategy. A product labelled small-cap, multi-asset or debt may have materially changed its exposure over time.
- Assess the manager, not just the strategy name: Confirm who generated the historical record, whether that person still manages the strategy and whether the investment process is repeatable. A top ranking becomes less relevant after a manager change, a change in assets or a significant alteration in the mandate.
The Silver-Shanghai technical link
DEVIL’S RETREAT. Silver can also remain stuck in a wide sideways range if it follows the path of Shanghai Composite index.
By Gurumurthy K
Things have turned around all of a sudden for the devil’s metal, as silver is often called, aboard and volatile price swings. The price has tumbled over 30 per cent from its record high of $121 per ounce. Silver (spot price) is currently trading at $38 per ounce.
Silver started the year with a bang by surging 70 per cent and recording a high of $121 per ounce in January. This is the first time in history that the poor man’s gold has risen above the psychological $100-mark. Prior to this rise, the price had skyrocketed 148 per cent in 2025, the highest for any year since 1979. Robust inflows into the silver-backed Exchange Traded Products (ETPs), dealers holding up huge long positions and strong retail demand in India were major factors that drove the price higher.
The big question now is where the silver price is headed. From a pure technical point of view, the connection of silver with the Shanghai Composite index is hinting that silver is headed for a prolonged sideways move, going forward. Before getting into these details, let us first see what caused the sudden fall in silver price and some other factors that are likely to impact the price in future.
THE TRIGGER
The Chicago Mercantile Exchange (CME) increasing the initial and maintenance margin for silver twice in May and June 2026, triggered the sudden price reversal.
The initial margin was increased from 11 per cent/12.1 per cent to 15 per cent/16.5 per cent. The maintenance margin, on the other hand, was increased to 15 per cent from 11 per cent. Following this announcement, silver price crashed over 35 per cent on a single day on January 30 from a high of around $118 to a low of $74, as traders rushed to book profits and exit their trades.
DEMAND AND SUPPLY
According to the Metal Focus World Silver Survey 2026 released by The Silver Institute, a deficit in silver is likely for the sixth consecutive year. It is estimated that there will be a deficit of 46 million ounces for this year. This deficit will be about six million ounces higher than the one seen in 2025.
The supply/demand scenario can remain uncertain due to the ongoing geopolitical tensions. So, this may not have a major say on the price movement, going forward.
But, we see the US dollar and gold/silver ratio as the major factors driving the silver price either way, this year.
DOLLAR IMPACT
A close study on the price movement since the beginning of this year shows that the silver price has been largely driven by the dollar (see the chart). The dollar index has strengthened from a low of 95.5 in January to 101.45 now.
A surge in oil price on the back of the on-going US-Iran war has pushed the US yields higher. That, in turn, is supporting the dollar strength. The US Federal Reserve has kept the room for one rate hike this year. This can support the dollar to remain strong. As long as the dollar index stays above 100, it has the potential to test 103 finally and even 105-106 eventually in the coming months.
So, the upside in the silver price can be capped on the back of the strong dollar.
GOLD/SILVER RATIO
The surge in silver price to $121 in January dragged the gold/silver ratio to a low of about 43.5. This was the first time in the last 15 years that the ratio had declined below 50. Prior to this fall, the average value of this ratio had been around 80 since 2015. Barring the dip to 30 in 2011 and the rise to 127 in 2020, the ratio has been moving inside a wide range of 40-100 since 1984.
The ratio has now come up to 69. Based on technical analysis, it can rise to 76-78 in the coming months. Gold ($3,052 per ounce) has room for a fall to $3,800-$3,750. The upside can be capped at $4,300 from here.
For a range of $3,750-4,300 in gold and 66-78 in the gold/silver ratio, we get an average price of $56 for silver. This suggests that silver price can remain subdued.
CHINESE CONNECTION
The movement in silver price shows that the recent movement in silver is similar to that of the earlier movement in the Shanghai Composite Index.
The movement in silver price since April 2024, is similar to that of Shanghai Composite index (see chart). If silver follows the same trend sustained, then it suggests that the upside in silver can be capped at $70.
Historical movement shows that the Shanghai Composite index ran into a multi-year sideways consolidation from 2016 to 2024.
This suggests that silver can also remain stuck in a wide range of $40-70, going forward.
GLOBAL BOARDROOM CHATTER
What they say on their India plans
With India being the fastest-growing large economy, "what is your India plan" is a common topic in boardrooms of most global corporations. One important source to distill their India plans is from their quarterly earnings calls. This column presents what CEOs of global corporations are saying about India, along with news and insights from the key global business and earnings season. With the June quarter earnings season in progress, here are some global firms that reported their earnings last week:
- West Pharmaceutical Services, Inc. (UST, m-cap $23.1 billion): The US-based injectable-drug-packaging company identified India as its second-fastest-growing market, supported by new biosimilar approvals and increasing demand for GLP-1 products.
- Quote: "Global expansion continues. India is our largest geographic growth engine after China. Growth is broad-based but led by generic and biosimilar GLP-1 products, where we are participating in several newly-approved Indian programmes and will scale alongside our customers".
- Airbus SE (AIR, €161.9 billion): The aerospace major opened a helicopter assembly line in India to expand capacity and serve rapidly-growing civil and military markets.
- Quote: "We opened a new assembly line in India as helicopter demand is growing for both civilian and defence markets. The facility expands our production capacity and adds India to our global helicopter industrial footprint, alongside France, Germany, the US and Brazil".
- Valeo SE (FR, €3.1 billion): The automotive component supplier is expanding Indian manufacturing for electric vehicles (EV) and ADAS systems, targeting a three-fold increase in local sales by 2028.
- Quote: "We are investing in a new 3-in-1 e-Axle production line for Indian EVs and expanding our advanced driver camera line for local OEMs. We expect India sales to reach €700 million by 2028, three times 2023 levels".
- Nestlé S.A. (NESN, CHF 204.0 billion): The consumer goods major expects India to remain a key growth engine despite recent slower growth even as favourable sales-tax comparisons begin to normalise.
- Quote: "India continues to benefit from the sales-tax change, although the macro-economic and consumer environment is becoming tougher. Nevertheless, we still expect double-digit growth and see significant potential".
- 3M Company (MMM, $87.5 billion): The diversified industrial company reported a seventh consecutive quarter of double-digit growth in India, supported by expanded sales coverage and a dedicated local organisation.
- Quote: "India led double-digit growth across Asia, extending its growth streak. Our dedicated India-based team are driving this through a hybrid organisational model combining global business groups and central corporate functions to boost performance".
- Crown Holdings, Inc. (CCK, $12.8 billion): The beverage-can manufacturer plans to invest approximately $250 million in a new Indian plant with two high-speed production lines, supported by long-term customer commitments.
- Quote: "A new plant in India with two high-speed lines will cost around $250 million, depending on land and construction costs. We expect commitments covering at least 75 per cent of its volume, highlighting the long-term potential of India’s consumer economics. The site has been selected but remains undisclosed while land negotiations conclude".
Based on the July 26, 2026, edition of BusinessLine Portfolio, here is the reproduction of the market analysis article from page 7:
Short-term picture flips weak
By Gurumurthy K, bl research bureau
Nifty and Nifty Bank have been beaten down badly last week. We had expected the indices to sustain the initial fall and go higher. That view has gone wrong. Crude oil price hitting the $100 per barrel mark on the back of the US-Iran war is weighing on the Indian markets.
Sensex and Nifty fell 2.7 and 2.3 per cent, respectively. Nifty Bank was the worst hit and was down over 3 per cent. On the sectoral front, BSE Realty, Private Bank and BSE Bankex indices fell the most. Both indices declined by 4.9 and 2.9 per cent last week.
The benchmark indices have indeed declined below their intermediate supports, which is contrary to our expectation. The recent price action has started to impinge on our expectations. So, we now prefer to step aside and watch the price action without taking any specific position until we get some clarity.
Nifty 50 (23,767.45)
- Short-term view: The picture looks like a head and shoulder formation on the daily chart. Key resistance for this week is at 23,800. A break below 23,700 can drag it further down to 23,400 and even lower. For the index to negate this fall, Nifty has to breach 24,000 decisively. Only then the upside will open up to revisit 24,400-24,500 again.
- Medium-term view: Our view remains bullish in the broad 22,000-26,500 range as long as the index stays above 22,000. A fall to 23,000 could lead to 22,500 and lower levels. However, for now, there is no change in the broader bullish view of Nifty seeing 26,000 or even 30,000 in the long term; it is only that the rally can now happen with a delay.
Nifty Bank (56,693.50)
- Short-term view: The fall below 57,000 has turned the short-term picture weak. A crucial support is around 55,000. A bounce from there can take the index up to 57,400 or 57,700, but a break below 55,000 will be bearish.
- Medium-term view: The level of 55,000 is a crucial support. A break below it can drag the index to 53,500 or even 51,000. Key resistance is around 59,000; a sustained break above it is needed to strengthen the bullish case for 65,000 in the medium term.
Sensex (76,069.77)
- Short-term view: The fall below 76,500 is a negative. Immediate resistance is at 76,200. There is room for a fall to 74,800 or 74,500. A bounce from this region will give relief, but a break below 74,500 can lead to 73,300.
- Medium-term view: While there is a struggle within the 71,000-86,000 range, our long-term bullish view remains unchanged. We expect the Sensex to eventually breach 86,000 and rally toward 94,000.
Nifty Midcap 150 (22,685.25)
The index declined well beyond its first support level of 22,750. Failure to rise back above 22,800 can drag it down to 22,000-21,500. The long-term bullish view remains, with an eventual target of 28,000-28,500, unless the index declines below the 21,000-20,800 support zone.
Nifty Smallcap 250 (17,601.20)
A crucial support is in the 17,500-17,400 region. If it sustains this, a rise to 17,800-18,000 is possible, keeping the broader bullish view for 22,500-25,000 intact. A decline below 17,400 could lead to 16,500 or lower.
INDEX OUTLOOK SIDEBAR
The benchmark indices should hold above their immediate support to avoid more fall.
Key Supports to Watch:
- Nifty 50: 23,620
- Sensex: 74,500
- Nifty Bank: 55,500
Any rally in US markets will be capped and can be short-lived
US MARKET OUTLOOK. Any rally from here will be capped and can be short-lived.
By Gurumurthy K
The Dow Jones Industrial Average fell for the third consecutive week. The S&P 500 and the NASDAQ Composite indices were also down for the second week in a row. The Dow Jones and S&P 500 were down 0.28 per cent and 0.61 per cent, respectively. The NASDAQ Composite was knocked down over 2 per cent last week.
The price action over the last few weeks indicates that the US benchmark indices are struggling to rise and are turning down. Near-term supports are there for all the three indices. A break below it can drag the indices further lower in the coming weeks. Any bounce from here will be capped and can be short-lived.
DOW JONES (31,952.20)
The fall last week extended well below the 50-day moving average, currently at 31,650. The index touched a low of 31,450 before rising slightly from there. If it manages to get a good follow-through rise, then 32,350 or 32,500 can be seen this week. The region between 32,150 and 32,250 is a strong resistance which can cap the upside. The Dow Jones can reverse lower either from 32,350 itself or after a move up to 32,500. A fall back to 31,800 is likely. A decisive break below 31,800 can then drag it down to 31,300 or 31,200.
S&P 500 (7,411.97)
The fall is slow, but the downside is gradually increasing. The index has to rise past 7,500 to get a breather. However, that looks less likely as the price action on the daily chart indicates the struggle to rise past 7,450. That keeps the S&P 500 index vulnerable to a break below 7,400. Such a break can drag the index to 7,300, 7,250 or even 7,200-7,180 in the coming weeks.
NASDAQ COMPOSITE (24,975.82)
The index has just broken the key support level of 25,000. That keeps our overall bearish view intact. The next key target is 23,700-24,100, which can be tested this week. Resistance for the NASDAQ Composite index is at 25,500, and even 26,000 in the coming weeks.
MOMENTUM GAINS
The US 10Y Treasury Yield can rise to 4.8 per cent.
DOLLAR OUTLOOK
The dollar index (101.45) has risen well, breaking above the 101.20 resistance. This has negated the danger of seeing 100.20 in the short term. The region between 101.20 and 101 will act as a strong support now and limit the downside. The outlook is bullish. The dollar index can now rise to 102.50 from here initially and then 103 eventually. Such a rise will also keep our medium-term bullish view to see 105-106 on the upside intact. The index has to decline below 100.80 to bring back the chances of the fall to 100. But that looks less likely.
TREASURY YIELD
The US 10-Yr Treasury Yield (4.68 per cent) sustained well above the 4.60 per cent support as expected. Indeed, it has surged well breaking above the key resistance level of 4.6 per cent. A strong surge in crude oil price has pushed the yields higher. Our overall bullish view remains intact. The rise to 4.8 per cent is happening in line with our expectation. Resistance is around 4.8 per cent. If the current momentum sustains, there is potential to see 5 per cent on the upside. We will have to wait and watch.
New 10% US Section 301 tariff puts pressure on gems/jewellery exports
COSTLY DEALS. Rivals benefit from duty-free access, offsetting India’s tariff advantage over some countries.
By Amiti Sen, NEW DELHI
The US decision to impose a 10 per cent additional tariff on Indian exports under its new Section 301 forced-labour regime has put the country’s gems and jewellery exporters under pressure, although India enjoys a tariff advantage over several competing manufacturing hubs.
The Gem and Jewellery Export Promotion Council (GJEPC) said the new tariff will pose challenges for Indian exporters, particularly in the face of competing diamond trading centres, such as in the EU and Africa, continuing to enjoy duty-free access for natural diamonds.
“European Union (Belgium), a global diamond trading hub, continues to enjoy a zero per cent preferential tariff on natural diamonds, while comparable Indian origin diamonds attract a 10 per cent duty, creating a significant competitive gap for Indian exporters,” GJEPC noted in a statement on Saturday.
While India enjoys a tariff advantage over countries such as China, Hong Kong, Thailand, Türkiye, the UAE, Israel and Vietnam, which are being charged a higher additional tariff of 12.5 per cent, several major diamond producing countries—including Botswana, Namibia, the Democratic Republic of the Congo, Zimbabwe, Sierra Leone, Liberia, Ghana, Tanzania and Mauritius—remain outside the scope of the current Section 301 action, the statement noted.
HIGHER DUTIES
The new Section 301 regime, which came into effect on July 24, 2026, replaces the temporary 10 per cent Section 122 tariffs, following investigations by the US Trade Representative into the manufacture, production and enforcement of prohibitions on imports produced with forced labour across 60 economies.
Jewellery exports will continue to attract a total duty of approximately 5.5 per cent to 6.5 per cent, in addition to the additional 10 per cent Section 301 tariff, taking the effective import duty to approximately 15.5 per cent to 16.5 per cent. Lab-grown diamonds and synthetic stones also remain subject to the 10 per cent additional tariff.
“Imposing a 10 per cent US tariff under the new Section 301 regime, while at all justified, remains a challenge for India’s gem and jewellery exports, particularly as key competing trading centres in diamond continue to enjoy duty-free access for natural diamonds,” GJEPC chairman Kirit Bhansali said.
He said India’s placement in the lower tariff band provides some relative competitiveness for jewellery exports but added that bridging the remaining tariff gaps through a free India-US bilateral trade agreement and securing tariff relief for natural diamonds and coloured gemstones remain key priorities.
Chennai Metro to extend services to Chengalpattu; invites bids for DPR
By T E Raja Simhan, CHENNAI
Chennai Metro Rail Ltd (CMRL) has initiated plans to extend the metro network from Chennai airport to Chengalpattu, the “gateway” to the rapidly growing southern suburbs. CMRL is in the process of preparing a Detailed Project Report (DPR) for extending the metro up to Chengalpattu via Tambaram, for a stretch of about 25 km, as part of Corridor-1 (Phase-I).
The proposed extension builds on the Chennai Airport-Kilambakkam Metro project, for which CMRL submitted a DPR to the State government in February 2023. The 15.46-km elevated corridor, estimated to cost ₹4,080 crore, including an elevated road, will have 13 stations and connect Chennai Airport with the Kilambakkam bus terminus.
SEAMLESS NETWORK
According to the DPR, the Metro corridor has been proposed to parallel, while the elevated road will run at Level 1, providing seamless connectivity to the Kilambakkam terminus. Intermediate ramps are planned near Tambaram to provide access to the Outer Ring Road. The elevated road has also been designed with provision for a future expansion to Chengalpattu.
Apart from the Chengalpattu proposal, CMRL has also floated a tender to prepare a DPR for extending Corridor-5 (Phase II) from Assisi Nagar in Madhavaram to Wimco Nagar in North Chennai, an 11 km stretch. These extensions aim to help strengthen Metro connectivity in North Chennai by linking with the existing Wimco Nagar Metro station.
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