Indian equities may stay rangebound for another 6-9 months, says Mahindra Manulife MF CEO | Stock Market News

India’s stock market may have little reason to break out of its range in the near term, with valuations needing to cool, the global artificial intelligence (AI) trade losing some momentum and foreign investors eventually returning, according to Anthony Heredia, managing director and chief executive officer of Mahindra Manulife Mutual Fund.

In an interview with Mint, Heredia, who oversees assets worth ₹38,650 crore, said investor sentiment remains balanced rather than euphoric or pessimistic. The market has been “strictly range-bound” for the past two years, he said, and could remain so for another six to nine months.

“It’s a normal structural consolidation phase, not a red flag,” Heredia said.

Sentiment is stable right now—neither euphoric nor pessimistic. We’ve been in a strictly range-bound market for the past two years. That’s why your trailing one-year returns can look positive or negative depending entirely on the day you check your portfolio.

We expect this sideways movement to persist for another six to nine months. It’s a normal structural consolidation phase, not a red flag.

DIIs are strategic, long-term allocators. Thanks to steady domestic SIP inflows, they are operating with a clear three-to-five-year horizon. For retail investors who joined the market in the last four or five years, a flat market feels incredibly unsettling because they’re used to uninterrupted gains. But older and more experienced investors—those with 20 or 30 years in equities—know the reality: range-bound phases are historically the best times to accumulate, not panic.

Stay patient and diversify. A sideways market is the ultimate stress test for your portfolio, and it highlights the absolute necessity of true asset allocation. If you’re relying solely on domestic equities right now, you’ll feel the drag.

You need to look a little beyond—consider international equities and, more importantly, consider non-equity products like multi-asset funds and hybrid funds to smooth out the ride when Indian stocks pause.

A sustained breakout will require three converging catalysts: cheaper valuations—as corporate earnings grow while the market stays flat, P/E multiples will naturally cool down; a slowing AI trade—we need to see global capital rotate out of overcrowded foreign tech plays; and the return of inflows from foreign portfolio investors (FPIs)—once local valuations become attractive again, foreign investors will buy back into India.

Global investors view countries opportunistically. Just as a domestic manager toggles between mid-caps and large-caps, a global fund rotates across regions and themes.

Over the last 12 to 18 months, global capital has aggressively chased the AI transformation narrative. Since Indian listed companies aren’t direct, short-term beneficiaries of the profit pools currently available within the AI ecosystem, global money has simply moved to markets where that trade is actively playing out.

Eventually, yes. The extreme exuberance around the AI ecosystem will inevitably normalize as valuations and earnings expectations adjust over the next three-to-five-year cycle. When that dust settles, global investors will reassess.

The current narrative—that India lacks immediate triggers—will flip, and FPI flows will return to compound alongside the consistent DII support we already have.

Honestly, I don’t think the market is underestimating those factors. The fact that we are range-bound tells me a lot of this uncertainty is already priced in. If there’s one blind spot to watch, it’s global liquidity.

For the last 15 years, risk assets have floated on a sea of central bank liquidity. With global bond yields moving higher, we need to watch if that taps out. If the liquidity regime changes, it won’t be great for risk assets, equities included. At the end of the day, investing is about probabilities and how they are priced, not certainties.

Domestically, traction is limited. Without a significant tax advantage over traditional deposits, retail investors aren’t overly excited. Multi-asset funds are actually a much more tax-efficient route to get that fixed-income exposure.

Interestingly enough, foreign investors are much more bullish on Indian bonds right now than domestic players. FPI flows into fixed income have been robust, while local participation remains flat.

It comes down to three factors: diversity—Indian bonds offer a distinct, diverse opportunity set within the Asian landscape; index inclusion—India’s inclusion in major EM bond indices has turned it from an outlier trade into a mandatory benchmark allocation; and currency normalization—much of the anticipated rupee depreciation has already played out.

When you put that together, domestic rupee bonds are actually looking more attractive right now than dollar-denominated bonds from Indian or even Asian issuers, for that matter.

In theory, flexi-caps offer agility, but in practice, they remain heavily skewed toward large-caps. The data speaks for itself: multi-cap funds have consistently outperformed flexi-cap funds by about 1.5 to 2 percentage points annualized across one-, two-, three- and five-year horizons.

The takeaway is simple—you’re better off forcing true, disciplined diversification across market caps rather than paying a manager to guess which segment will lead next.

Six months ago, yes, distribution was a concern. Today, the landscape has shifted dramatically. The new dual exam combining mutual funds and SIFs (Specialised Investment Fund) has streamlined the certification process. Because client demand is surging, we expect the number of certified distributors to grow three to four times in the next few months. That initial bottleneck is effectively resolved.

It’s not a substitution; it’s an allocation expansion. Investors aren’t going to liquidate their mutual funds to buy SIFs. Instead, they’ll simply bolt SIFs onto their existing portfolios—perhaps alongside their MF allocations—using fresh capital rather than redeeming old investments.

The talent squeeze is highly specific: it’s on the investment-management side, not the back office. We have excellent mutual fund infrastructure handling sales, risk, compliance and operations. Folks are already used to dealing with complex derivative trading.

The real challenge is finding experienced portfolio managers who can successfully execute advanced long-short and derivative strategies. They are much rarer than traditional long-only managers, and that talent gap is only going to intensify as the SIF space crowds with new product launches and players.

Dipti has spent nearly a decade happily knee-deep in the fast-moving, occasionally nerve-wracking, and always fascinating world of stock markets, tracking everything from sharp sell-offs to surprise rallies, and the narratives that drive them. She began her journalism journey at Informist, sharpened her market instincts at CNBC Digital and Moneycontrol, and is now charting new territory with Mint. Here, she is exploring new ground, bringing together sharp analysis, on-ground insights, and a keen eye for what really moves markets.<br><br>Before stepping into journalism, Dipti studied law and worked with a solicitor firm for close to three years, an experience that gave her a strong foundation in analytical thinking, contracts, and corporate structures. But the pull of markets and storytelling proved stronger, prompting a switch from law to journalism.<br><br>She writes about stocks and investments, but that’s only part of the story. Dipti also teams up with market experts to turn complex trends into sharp, easy-to-understand videos, occasionally peeks at deals and acquisitions, and regularly picks the brains of industry leaders. Somewhere between earnings calls, market swings, and boardroom chatter, she’s always looking for the next story that explains what’s really moving the markets.

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