Valuations

UTI Mutual Fund September 2026 Equity Markets The UTI equity market September 2026 read centers on the proprietary equity valuation index — large caps only, and guidance for lumpsum allocation — now in the increase equity allocation zone. UTI equity market September 2026: the valuation index in the increase zone This month’s UTI equity market September 2026 briefing comes from UTI Mutual Fund. Read alongside UTI’s own September fixed income call and the Motilal Oswal September outlook. EQUITY VALUATION INDEX Increase Allocation Zone LARGE CAPS (P/B) Fairly Valued, Attractive MID & SMALL CAPS (P/B) Expensive Zone TOP-DOWN VIEW Better Risk-Reward in Large Caps Summary The UTI equity market September 2026 read: the index is in the increase equity allocation zone. Historically in this zone, the average one-year return has been 14%, with only an 8% probability of a negative one-year return. Separately, Vetri Subramaniam says investor expectations are the most challenging part of the current environment. The detail Nobody is addressing the root cause The US is still running fiscal deficits of 6 to 7% a year, with close to $8 trillion of maturities happening within the next one year, while central banks once major buyers are de-risking from the dollar and US government debt. Much of it is just refinancing — raising bonds to pay back bonds that are maturing. And there is a new issuer: the hyperscalers building the large data centers. Interventions only address the symptoms; the root cause is the fiscal deficit. Secular, or cycles in the market? In the US, large caps were only 65% of total market cap in August 2016 and have gone up to 77%; small caps have reduced from 14% to 8%. On a separate measure, India’s top 20 stocks were about 40% of market cap in 2000, rose to 50%, and have dropped to about 30% — a sharp decline particularly in the last five years. Is this secular, or are these cycles in the market? Subramaniam leans towards reading it as more cyclical, but offers it as a probability case. If it is cyclical, you have to consider the possibility and the risk of mean reversion. Valuations and the margin of safety On trailing PE the Nifty50 is more or less in line with its long-term average; on forward PE about 10% higher than the 16.5 times average. On price to book the picture is very different — about 2.69 times, almost 15% cheaper than its own long-term average, on a return on equity among the highest in more than a decade. Fairly valued and also attractive, but not cheap territory, which would need below 2.5 times. Midcaps and small caps trade at a higher price to book than large caps — still, in UTI’s opinion, the expensive zone, not even the fair value zone. As a top-down asset allocator the better risk-reward is in large caps, though his own fund managers are seeing more bottom-up opportunities there. In the last one year, against all their expectations, small caps returned 14% and midcaps 12% against 0.4% for large caps; over two years, he says, the three are much closer. What this means for investors What Subramaniam would have investors take away From the valuation index and the closing Q&A: Take the risk when you are getting rewarded for taking it. The index is in the increase equity allocation zone — but these are all probabilities, based on historical data. It is based only on large caps, and it is lumpsum guidance. Not an indicator he would use for midcaps and small caps, nor a signal about ongoing SIPs. From a modeling perspective, work with somewhere in the region of 12% per annum. Anything above that is exceptional stock or fund picking, and exceptional discipline in asset allocation. Investor expectations are the most challenging part of the current environment. Many came on board in the last five years and, having seen the rear view mirror, their expectations are just too high. The UTI equity market September 2026 briefing sits alongside UTI’s own September fixed income call and the Motilal Oswal September outlook. For the underlying regulatory framework, see the Association of Mutual Funds in India. Equity UTI Mutual Fund Market Insights Asset Allocation Large Cap Valuations September 2026 Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully. Past patterns are not indicative of future returns. The views expressed are those of the speaker and do not constitute investment advice.