Veteran Fund Manager S Naren asks investors to exercise caution as market hits all-time high

Naren said that no one cannot predict the top of the market.

ICICI Prudential chief investment officer S Naren has asked investors to exercise caution as markets hit all-time highs.

“Areas where people have to actually exercise caution is not mutual funds or hybrid funds. They need to exercise caution in derivatives, IPOs, and sectors which people don't understand," Naren said in an interview to CNBC-TV18, as he spoke on a range of issues.

The equity benchmarks took a breather from their record run of three days to end a tad lower on December 7.

The Nifty had again hit an all-time high on December 6 and added 126 points to the previous day's stellar gains to reach 20,800-mark in the morning session.

Indicators to watch

Investors should look at simple indicators such as price to earnings ratio, dividend yield, price to book and return on equity. If investors can identify these indicators correctly then they're in a safe company, he said.

In a boom cycle, investors won't make big returns in medium term. They'll be able to make returns in the long term.

Market top

Naren said no one can predict the top of the market. "Top of the market will be determined by how much foreign inflows come in," Naren said. Everyone in the market believes that foreign inflows are yet to pick up and once that happens, most of the fund will come in largecaps.

There isn't a better market than India right now. All other countries have serious challenges but India doesn't have those at the moment, the vteran investor said .

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