JioBlackRock MF sees value in equities after correction, favours target maturity funds for debt investors

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JioBlackRock Mutual Fund sees improved equity risk-reward after a sharp September correction, but says a sustained market recovery remains uncertain. Its CIO note favors tactical allocations and hybrid funds, while recommending target-maturity debt funds for defined investment horizons and cash or money-market funds for near-term liquidity needs.

JioBlackRock Mutual Fund sees an attractive risk-reward opportunity in equities following the recent market correction, but cautions that a sustained recovery remains uncertain. In fixed income, it favours target maturity funds for investors with defined investment horizons, while recommending cash and money market funds for those with near-term liquidity needs.In its September 2026 CIO note, JioBlackRock Mutual Fund highlighted how Indian markets performed in the said period.The fund house said that Indian equity markets faced pressure in September amid rising crude oil prices, geopolitical tensions involving the US and Iran, higher global bond yields and renewed foreign institutional investor (FII) selling. The Nifty 50 fell 5.5% during the month, while the broader Nifty 500 declined 5.85%, according to the note.Also Read | Explained: How mutual fund SIPs harness the power of compounding to build wealthThe weakness persisted despite supportive domestic indicators, including goods and services tax (GST) receipts reaching a 13-month high, robust automobile sales and manufacturing activity improving to a seven-month high. Negative global sentiment overshadowed these positive signals.However, JioBlackRock Mutual Fund said the correction has brought the market to levels where the risk-reward equation appears more attractive. The Nifty recorded an eight-week losing streak, its longest since 2001, and entered an oversold zone based on its weekly Relative Strength Index (RSI). The fund house also highlighted technical support around the 200-week exponential moving average and a support cluster between 22,000 and 22,400.Crude oil prices, which had surged to $108 a barrel, subsequently cooled to around $95, offering some relief. At the same time, FII net short positions in index futures remained elevated at approximately 267,000 contracts, potentially providing additional momentum to a market rally if short-covering gathers pace.Despite these supportive technical factors, the fund house cautioned that a sustained recovery is far from certain. Global and domestic macroeconomic conditions remain challenging, and corporate fundamentals and growth are uneven across stocks and sectors.Against this backdrop, JioBlackRock Mutual Fund expects tactical allocations to be important for investors seeking potential returns. It also sees hybrid fund categories as relatively more attractive in the current environment.What should debt mutual fund investors do?In fixed income, JioBlackRock Mutual Fund expects elevated bond yields to persist as inflationary pressures, crude oil prices and expectations around Reserve Bank of India (RBI) policy influence the market.India’s 10-year government security yield rose from around 6.9% at the end of August to above 7.15%, amid expectations of an RBI rate hike at the Monetary Policy Committee’s October meeting. Consumer price inflation rose to 4.82% in August, marking the third consecutive month above the RBI’s 4% target.The fund house noted that rising inflation, rupee weakness, higher crude prices and strong economic growth could give the RBI greater room to respond than it would have in a weaker growth environment. The narrowing yield differential between India and the US also complicates the outlook, with potential implications for foreign portfolio flows and the currency.Liquidity remains another concern. Earlier inflows had pushed surplus banking system liquidity to Rs 11.16 lakh crore. The RBI subsequently reduced the surplus through measures including variable rate reverse repo operations, open market operation sales and foreign exchange interventions.However, the fund house said liquidity pressures could persist as advance-tax outflows return to the system and investors assess the possibility of more structural liquidity withdrawal.Also Read | Parag Parikh Flexi Cap Fund added DLF, Bharti Airtel, Indus Towers and 10 other stocks to its portfolio in September. Details hereGiven uncertainty over interest rates and the direction of the bond market, JioBlackRock Mutual Fund said duration timing remains a low-conviction trade. Instead, it sees the current yield curve as offering a relatively attractive opportunity to lock in elevated yields across maturities.For investors with defined investment horizons, target maturity funds could help lock in prevailing yields. Those needing access to their money in the near term may find cash and money market funds more suitable, according to the note.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)If you have any mutual fund queries, message ET Mutual Funds on Facebook/Twitter. We will get them answered by our panel of experts. Do share your questions at ETMFqueries@timesinternet.in along with your age, risk profile, and Twitter handle