The Core Report

#861 Navigating Market Risk 2026: Why Fund Managers Are Bullish | Govindraj Ethiraj | The Core Report

43 min

The Core Report discusses navigating market risk in 2026, with fund managers Pratik Agarwal and Ashis Somaya offering insights into investment strategy amidst volatility. They highlight the potential for high alpha generation in India due to market shifts, despite current macroeconomic stresses, and emphasize the importance of a probabilistic, long-term approach for investors. The discussion also touches upon the resilience of Indian markets, the long-term India growth story, and a contrarian view on FII selling.

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✨ Key Takeaways

1

Fund managers anticipate high alpha generation in the current market due to significant shifts from legacy businesses to newer spaces, making it a favorable time for active management.
2

Despite current macroeconomic stress (high oil prices, FII outflows), the Indian market is seen as resilient, with much of the bad news already priced in, and expectations of a sharp rebound if global crises normalize quickly.
3

Investors are urged to adopt a probabilistic mindset and practice asset allocation, avoiding extreme, binary thinking that leads to poor investment decisions.
4

The long-term India growth story remains robust, with sustained growth across diverse sectors, offering a unique opportunity for long-term investors, contrasting with more volatile global markets.
5

A contrarian view on FII selling suggests it's not a significant concern, and a flip in favor of emerging markets (especially India) is expected within 3-6 months, potentially leading to rupee appreciation.

💬 Notable Quotes

"To us managers, it is risk of underperformance. Index is doing X. If you do X minus, we don't look good. But for investors, it may mean something completely different."
"What is most important to manage risk and volatility is two things... all successful investors, they need to be probabilistic. And second is probabilistic, not deterministic. And second is never swing for the fences, never go for the extremes."
"There is no story like India. If you think long term, there is no promise like India. If you think long term, we are the last sustained growth economy."