Sankaran Naren, Executive Director and Investment Director of ICICI Prudental Asset Management Company, is a formidable name in the asset management industry. Naren, who has a B. Tech of Iit Madras and an MBA of Iim Kolkata, is a veteran on the market with almost 35 years of industry experience. In ICICI Prudential AMC, it has passed more than two decades and manages some of the best known funds that have healthy wealth creators with legs over the years.
In an interaction in Bl.PortfolioTalk about a lot of problems. Starting with the impact of commercial rates, the current market valuations, Gold’s dream career and the future trajectory and RBI’s actions, expresses its sincere points of view.
Specifically, it is highlighted by the relatively drilling macroecomic environment of India while increasing the conerns on the global scenario.
Naren also shares their views on the companies of the New Age and the Internet, expressing the difficulty in valuing them with precision and why the late leg can have in the identification of some issues. He reiterates his concerns when I go overboard in mid and younger, since many investors do not understand the risk of assuming in search of greater returns.
Naren favors quality names together with what he calls the “profit review impulse” in the current environment. It was positive about financial services and insurance segments six months ago, and it was worth it, since these sectors have a higher leg yield.
Finally, he reiterates his views on following a rigorous asset assignment frame with investments distributed between shares, bonds and gold, and adhere to him to create a balanced portfolio.
There are extracts from the interview here.
You have been warning about Conerns’s assessment in the market for a while. After a 15 percent correction in large limits, a 25 percent decrease in the largest markets and a 30-50 percent drop in some pockets in the last six months, do you think the valuations are now more reasonable, with a strap in the space of great capitalization?
Yes, the big values are now operated with more reasonable assessments. However, it is important to remember that markets are not always negotiated at fair value: they can go above or below it. Historically, when the markets are undervalued, anyone becomes theft and vice versa.
With tax exemptions in the recent budget and the payment commission for government employees that will be activated next year, do you think the demand for weak consumption will improve?
The government has taken a positive step by encouraging consumption in certain square brackets. However, they are still challenges, partly in low -income segments, as reflected in the performance of some basic products/consumption products companies. It is difficult to predict if all categories of consumption will see an impulse. That said, the tasks of measures in the budget, together with the monetary flexibility of the Bank of the Reserve of India, are steps in the right direction.
Despite the attractive valuations in banking and financial services, especially the PSU, the market does not seem to favor them. There is no important NPA problem apart from the slow credit and the growth of deposits. Some believe that the best of bank history is behind us. Do you agree?
Banking has been one of the best performance sectors in the correction of the recent market, so it is difficult to agree with the opinion that it is best to be us. However, since banking is a cyclical sector, its performance depends on the general economic environment. While the valuations are still reasonable, banks generally fight when markets decrease.
The reciprocal rates imposed by the United States have injured many sectors. Do you think the groups on these rates are exaggerated?
It is difficult to say it. The United States is one of the world’s largest economies, and separated from pharmaceuticals, many sectors have a negative affected leg by reciprocal tariffs. We expect a relaxation in these rates because they persist, they could affect the growth in both the US and in the exporting nets, which can stop global economic growth.
Markets around the world are under pressure due to rates advertisements by the administration of the United States. Do you see the possibility of a downward review given the scale of the rates imposed?
It is very possible that the current scale of tariffs imposed on several nations can be checked. Currently, tasks seem quite steep and can see some downward adjustments over time. However, if history is a guide, predicting the direction and rhythm of such policy changes is quite challenging, and we have limited visibility on how the situation will develop.
Is the recession of the United States a real possibility, and how is the strong increase in the yields of the US bonds?
The American economy, which has been served as a global growth engine since 2012, seems to be losing impulse. A deceleration seems imminent, but it is not clear if this will culminate in a complete recession. Prolonged and unresolved commercial tensions between the United States and China only add to this fragility.
In addition to these groups is the strong increase in the yields of American bonds. Historically, US Treasury bonds have seen Bone as the safest asset in the world, particularly the market stress ceiling periods. But recent behavior in bond markets, where yields are also increasing in the midst of volatility, suggests a change in feeling. This indicates that global investors may be losing confidence in the debt of the United States as a safe refuge, which is an alarm given the massive refinancing burden that the United States faced. If treasure bonds cease to be the global shelter, then that has deep implications.
The RBI has reduced interest rates twice and has been infusing liquuidity in the system since December through Omos. However, some demand more cuts in CRR and SLR together with the repository rate to boost bank loans and the economy. Do you think RBI has done enough?
The RBI has done a commendable job in relieving monetary conditions in recent months, providing a strong impulse to economic growth. However, the greatest challenge has been the global environment, which does not have much support. The RBI steps have been positive, but global macroconomic uncertainties remain a concern.
Are you satisfied with the domestic macroconomic situation? The rupee has been strengthened in recent weeks, GDP growth is estimated at 6.5 percent, inflation is under control and GST collections are healthy.
We are widely positive in the macroconomic perspective of India. However, we are also aware of the risks that arise from global factors such as tariffs and a potential slowdown in global growth in 2025-26. The way in which these factors will affect the national economy of India is not yet clear, and we will be watching things closely.
Many Internet and electronic commerce companies are entering the main market in extraordinary valuations. Some are making losses or have thin margins that do not have thesis assessments. Why investors, including mutual funds, participate in these higher opi?
As fund managers, we face a difficult challenge when evaluating such companies. Some of these companies have strong models, even if they do not generate profits significantly under traditional accounting standards. Many of the largest global technological companies either had high profits in their early years. We take a cautious approach to such investments, balancing the risk and possible rewards. We recognize that we could some that some call these calls or being late in collecting emerging trends.
He previously warned that small and mid limits were too risky for retail investors. His concerns have developed with thesis indices falling significantly. Do you still have this view?
A long -term sustained commitment is essential for investors who seek to invest in small and mid -SIP through SIP. We are concerned that many investors, who had seen a prolonged upward market, cannot not full time the risks involved in short -term investments in small and half layers. As public money managers, it was important for us to highlight such risks. Since India remains a long -term structural history, it is likely that a very long -term perspective to invest in small and mid -eyelids is good.
What investment styles (value, quality or growth, do you think will exceed, in the future?
At this point, we favor impulse styles based on quality and profits reviews. We have always believed firm in the opposite approach to long -term investment.
In which sectors or themes are you currently optimistic?
Instead of focusing on specific sectors, we emphasize asset allocation. A well diversified portfolio between actions, debt, commercial real estate and other assets is essential. We also urge precaution when investing in non -listed actions, microcapas and small capitalization shares.
Six months ago, we were more positive in banking, financial services and insurance because they had had a lower performance, but since then, these sectors have surpassed most other sectors.
What is your point of view about gold?
Gold is at its highest and historical point, it tends to maximum periods or global economic agitation. While it has worked well, we are not optimistic with gold, since we have the leg in the past.
What agreement for you are the positive aspects for India compared to other emerging markets?
India remains fundamentally strong, special in terms of macro indicators such as checking account, fiscal deficit and inflation. The main concern in the last 18 months has been the valuation of the high capital market. Publish the latest liquidation assessments, now the valuations of great capitalization are more reasonable, according to our internal metrics, while the small and mid -segments of the capitalization continue to be expensive. In addition, the economic structure of India, to a large extent, nature is isolated from some of the winds against global ones that affect more export -dependent economies.