Backing largecaps, ICICI Pru's Naren says macros are fine, India has a 'valuation problem'

ICICI Prudential's veteran CIO, Sankaran Naren, is adding exposure to Indian large-cap stocks, citing valuation challenges rather than macro issues. Despite concerns over US tariffs, he remains cautiously optimistic, favoring a balanced investment strategy.

Veteran money manager and CIO of ICICI Prudential, S Naren said his fund house is increasing exposure to largecap companies, at a time when global markets are assessing the impact of the upcoming US reciprocal tariffs on trading partners, and the extended selloff in Indian equities is showing signs of bottoming out.

Naren, who oversees more than $100 billion in assets, told Bloomberg News in an interview, "India does not have a macro problem, it has a valuation problem."

The top money manager said the Indian equity market does not exhibit a fundamental crisis, but high valuations are a challenge. Naren advised investors to avoid taking maximum risk in their portfolios by indiscriminately loading up on equities, and instead, recommended a balanced approach in the portfolio.

On market sentiment, Naren said Indian stocks are less 'irrational' now compared to six months ago. "At the same time, they are not mouthwatering to buy," he added. Largecap stocks are now looking more stable, Naren said, as reflected in Nifty 50 being relatively unchanged for the year compared to a 14% decline in the Nifty Smallcap 250 Index, he pointed out.

On key risks, Naren said climate change, US tariffs, geopolitical issues and advancements in artificial intelligence as factors that could influence the global equities going forward. He stressed the importance of being cautious while adding exposure to largecaps, and said the current environment requires a prudent and selective investment strategy.

The month of March has seen Nifty reclaiming 23,500 level, with some experts pointing to further upside from here on. Key indices are likely to snap the series of monthly losses on the back of a revival in foreign inflows.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​​​