CEO Speak October 2025

Festive Cheer and Steady Fundamentals

October 2025 captures the spirit of resilient India and reaffirms our growth trajectory- an Indian economy that is showing signs of revived consumption, reinforced infrastructure investment, and increasing global trade linkages — all against a backdrop of manageable inflation and accommodative policy potential. While we do not ignore external uncertainties, the structural story is increasingly supportive for both equities and debt.

Domestic consumption is acting as a cushion for growth in the second half of FY26, even as global growth remains an open question. The festive season and tax/GST rate rationalisation are helping boost discretionary spending. While there are uncertainties on the US India trade agreement, we have seen several bilateral trade and investment pacts advancing. Notably, the European Free Trade Association (EFTA) – India agreement, effective 1 October 2025, will bring a USD 100 billion investment commitment over 15 years.

Equity - Stay goal focussed.

The physical and digital retail ecosystem is showing life — from vehicles and electronics to jewellery and consumer goods. The festive + marriage season is expected to inject significant demand. On the mutual fund front, the industry hit an all-time high in assets under management (AUM) of approximately INR75.61 lakh crore as on 30^th Sep 2025 (www.amfi.com) underscoring strong investor participation. Given the positive structural backdrop, equities remain appealing. That said, valuations are not fully cheap — so selectivity and active management matter.

Our advice to investor remains consistent. Stay focussed on your financial goals, use SIPs to your advantage for long term wealth creation and take help of your financial advisor for investment planning.

Fixed Income – Create the right balance

Often overlooked in exuberant equity phases, the debt market today offers interesting signals and opportunities. Yields on the 10-year government bond in India have hovered around the ~6.5 per cent level. Inflation is under control, giving the Reserve Bank of India (RBI) room to maintain or ease policy — which is supportive for bond markets. Importantly, flows from foreign investors into Indian government bonds are rising amid favourable global emerging-market dynamics.

Why consider dynamic bond funds?

• Flexibility: Dynamic bond funds adjust portfolio duration and take tactical views — making them well placed when interest-rate/fiscal conditions are evolving. Unlike other debt funds that must adhere to a fixed maturity profile, dynamic funds have the flexibility to invest across various debt instruments, maturities, and credit qualities.
• Active management of interest rate risk: With yields at ~6.5 per cent and inflation contained, there is potential upside both from accrual and duration. A core advantage of dynamic bond funds is the fund manager's ability to adjust the portfolio's duration to benefit from interest rate changes.
• Diversification benefit: In a portfolio oriented largely towards equities, adding debt via dynamic bond funds provides balance and a moderating influence when equity markets become volatile.

Asset allocation is a fundamental aspect of your investment planning. Prudent use of debt options in the mutual fund space should be a part of your asset allocation strategy.

As we step into the final months of 2025, the outlook for India’s economy and capital markets remains promising. Robust domestic demand, steady corporate earnings, and a continued policy push toward infrastructure and manufacturing are setting a strong foundation for sustainable growth. Global uncertainties and volatility may continue, but India’s long-term growth story is intact and in the right direction. For investors, this is a time to stay disciplined, diversified, and invested — letting time and consistency do the heavy lifting towards long term wealth generation.

At HSBC Mutual Fund, we remain committed to helping you build wealth responsibly and navigate opportunities with confidence. Stay disciplined. Stay invested.

Views provided above are based on information in public domain and subject to change. Investors are requested to consult their financial advisor for any investment decisions.

Source: AMFI, Bloomberg. Data as on October 31, 2025 or as latest available

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