IPOs to Stir Market Calm, Says Jio BlackRock CIO

Large initial public offerings (IPOs) from entities like Jio Platforms and NSE might cause a temporary lull in the secondary market. Rishi Kohli, chief investment officer at Jio BlackRock Mutual Fund, noted that such large issues often lead to subdued market activity for a few weeks before and after their launch.

Kohli highlighted that mutual funds are significant players in IPOs, but their overall impact on fund houses is minimal as anchor investments represent a small fraction of total assets. He also observed a significant shift in investor behavior, particularly the resilience of systematic investment plan (SIP) books, even with potential reversals in mid- and small-cap segments. SIP flows are expected to remain flat or experience only marginal declines during market corrections.

The CIO prefers a selective approach to the current market, citing wide variations in valuations and earnings growth across sectors. He believes "this is a stock picker's market," where strong investment processes can generate alpha. Large-cap valuations are noted as below historical averages but not cheap, presenting selective opportunities. Mid- and small-cap valuations appear reasonable when considering their growth potential.

Jio BlackRock Mutual Fund currently favors sectors such as pharma, banks, materials, and information technology, though Kohli cautions that market positioning can rapidly become tactical. He advised that while a "buy-and-hold" strategy might suit small caps with long-term growth stories, large and mid-cap investments require more frequent tactical adjustments. The fund house is set to launch a balanced advantage fund this week, followed by two factor-based index funds. Growth in active schemes and its GIFT City business are also key priorities.