‘I am not a bear!’ says S Naren but explains why the market is in a moderate return environment

The valuations in the Indian stock market are becoming more reasonable with the Nifty at 17,000. This makes it a good time for investors to consider increasing their exposure to equities. In an interview with CNBC-TV18, S Naren, ED and CIO of ICICI Prudential AMC said that the valuations are more reflective of the environment and that India is outperforming peers and will still result in moderate to low growth in the near term.

“At 17,000 valuations are much more reasonable and the global macro people are just too short on everything and we have a Fed meeting today and it is possible that there can be a good relief rally, if all the shorts in the system have to be taken out there can be a very good relief rally,” he said.

Sectoral Picks
Talking about banks, S Naren said that the banking sector is currently trading at a reasonable valuation compared to other consumer discretionary sectors. He said, “Till you see good inflows, banks do not perform; not because it is unattractive, but because it is a big holding in every fund. So, I would say banking is certainly something which is attractive.”

However, the pharma sector has been performing poorly in recent times. Naren said that this sector has the potential to do well in the medium term, given the growing demand for healthcare services and the increasing awareness of the importance of preventative healthcare measures. He also said that the telecom sector has the potential for growth in the coming years, as the average revenue per user (ARPU) is expected to increase over the next two-three years.

On the technology space, he said that he is optimistic about the prospects for rerating over the longer term. The sector has shown tremendous growth in recent years, and there is still scope for further growth as businesses continue to digitize and adapt to changing consumer preferences. Similarly, the pharma sector also has the potential for a good move.

Naren also said that investors may want to consider investing in new-age companies via initial public offerings (IPOs) if the valuations are reasonable. This could provide an opportunity for investors to gain exposure to emerging industries and technologies that have the potential for significant growth in the years to come.