'Roughly 15-20% of the market is still reasonably valued'

In a market obsessed with momentum and macro headlines, Rukun Tarachandani prefers to tune out the noise. As Fund Manager at PPFAS Mutual Fund, he sticks to the fundamentals—strong cash flows, clean governance and attractive valuations. If the market offers nothing compelling, he’s happy to wait it out. That’s why the five-star-rated PPFAS Flexi Cap Fund has maintained a cash holding of over 20 per cent, even through a rally. Tarachandani isn’t chasing corrections or calling tops; he’s simply letting opportunity, or the lack of it, guide the fund’s positioning. In this conversation, he explains why valuations still look stretched, how bottom-up investing drives everything from stock picks to cash levels and what makes PPFAS’s dynamic and arbitrage funds different from the crowd. Here’s the edited excerpt. How do you see global issues like geopolitical tensions and potential US tariffs affecting Indian markets in the near to medium term? In the near term, there will be volatility, primarily because the stance on tariffs is unclear. One day, there’s talk of tariffs on the pharmaceutical sector, and the next day, there isn’t. The uncertainty around which sectors will ultimately face tariffs, the quantum of those tariffs, and which geographies will be affected creates ambiguity. As this evolves, we may continue to see stock- and sector-specific volatility in the markets in the near term. However, in the medium to long term, it’s ultimately the fundamentals of a firm—its earnings growth and business fundamentals—that will drive returns for individual stocks and the stock market as a whole. So, when do you see fundamental factors, like earnings growth and economic recovery, coming back into focus? At a macro level, we don’t actively