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

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.