Franklin India Money Market Fund: Key Market Perspectives
Current Portfolio Construction
The current portfolio (as on 30 June 2026) has 68% of the portfolio allocated to 6 months to 9 months maturity while 20% is allocated to 3 to 6 months maturity. About 12% of the portfolio allocation is towards 9 to 12 months maturity segment.
Key points on why should an investor look at Franklin India Money Market Fund
During the monetary policy meeting in June, RBI maintained status quo on policy rates and continued with a neutral policy stance. The West Asia conflict had led to surge in prices of crude oil to over USD 100 levels. With easing geopolitical tensions and on-going negotiations, crude oil prices have declined below USD 100 per barrel, easing inflationary pressures.
Yield Movement:
With liquidity conditions continuing to remain in surplus and easing inflationary pressures, money market yields moved lower in June 2026. RBI measures to attract foreign inflows through FCNR deposits further led to easing of yields
Liquidity Conditions:
Liquidity conditions remained in surplus and RBI may continue to actively manage liquidity through tools such as Variable Rate Repo (VRR) operations and other liquidity absorption measures if required.
Outlook: We believe a policy pivot by RBI will be preceded by a change in policy stance. Cooling energy prices have eased upside risks to inflation. The progress of the monsoon will remain an important determinant of food prices and inflationary pressures going ahead. The RBI has incentivized Foreign Currency NonResident (FCNR) deposits and External Commercial Borrowings (ECBs) to help ease pressure on exchange rates. These measures are expected to attract about USD 50 to USD 70 billion in foreign exchange which would help improve liquidity and support credit growth which continued to grow over 17% YoY in June 2026.
In the money market fund, we are investing predominantly in Jan to March 2027. We can look beyond March maturity segment when risk-reward scenario appears remunerative.
Portfolio Maturity Profile (% of Assets)
Key Factors at Play
1. Money Market Yields Moved Lower in June
The money market yield curve has shifted downwards amid surplus liquidity in June 2026
Core liquidity stood in surplus at INR 4,82,130 crore as on 15 June 2026, lower than INR 4,86,400 crores on 31 May 2026.
In Summary
We feel that investors may benefit from investing in a money market portfolio which is positioned with optimal duration. The portfolio may likely benefit from high accruals with minimal duration risk.
Risk-o-meter and Product Labeling
Potential Risk Class (PRC) Matrix
Potential Risk Matrix contains Maximum Interest rate risk (calculated using Macaulay Duration of the scheme) and Maximum Credit Risk (calculated using the Credit Risk Value)
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