ICICI Prudential AMC’s Anish Tawakley: Stay cautious on mid- and small-caps; prefer large-caps, cyclicals

ICICI Prudential AMC’s Anish Tawakley: Stay cautious on mid- and small-caps; prefer large-caps, cyclicals

The Indian equity market is currently in a phase of consolidation, driven by a temporary loss of economic momentum and elevated investor expectations, said Anish Tawakley, Co-Chief Investment Officer (Equity), ICICI Prudential Asset Management Company.

Speaking at the Moneycontrol Mutual Fund Summit, Tawakley noted that while the economy remains fundamentally strong, it did experience a mild slowdown in momentum. “There is no structural problem with the economy, but the pace of growth did moderate. We expect that to recover,” he said.

He explained that the earnings growth cycle, which accelerated sharply as the economy rebounded from earlier slumps, has now peaked temporarily, leading to some cooling in both revenue growth and profit margins.

“In this environment, we are sticking to large-cap stocks, where valuations are relatively stable,” Tawakley said. “We are cautious on the mid- and small-cap segments, where a lot of froth has built up. Investors should be prudent and allocate more towards large-caps.”

On sectoral preferences, he expressed optimism about cyclical sectors benefiting from an economic recovery. “As the economy regains momentum, industrials, capital goods, automobiles, and select financials are likely to do well. These remain our preferred spaces,” he added.