Near-term outlook complicated, but bullish on equities: ICICI Pru's S Naren

Value opportunity in stocks is more and we think over the next 2-3 years, the opportunity will continue to exist, says S Naren, CIO, ICICI Prudential Asset Management Co

One of the largest local Indian funds is turning bullish on the country’s equities just as foreign investors are exiting Indian stocks at a record pace.

Three months back, “both valuation and investor exuberance were a problem, which is why we recommended asset allocation and debt funds,” said Sankaran Naren, Mumbai-based chief investment officer at ICICI Prudential Asset Management Co. But now, “value opportunity in stocks is more and we think over the next 2-3 years, the opportunity will continue to exist.”

Sustained buying by domestic investors like ICICI Prudential has helped Indian stocks avoid a sharp rout as the surge in oil prices raised concerns of an inflation shock in the energy-importing nation. The S&P BSE Sensex this week climbed more than 2%, 

snapping its longest run of weekly declines since April 2020. Foreigners sold nearly $3 billion worth of Indian stocks last week, the biggest weekly outflow ever.

Though the near-term outlook remains “complicated,” the fund manager, with $64 billion of assets under management, is expecting a sharp rally in equities if the Ukraine invasion is resolved. After that, the market will refocus on Fed tightening, which could lead to another bout of volatility, and offer buying opportunities, Naren said.

ICICI’s Multi-Asset Fund, which invests in stocks, bonds and gold, has beaten 98 percentile of peers over last three years while its Value Discovery Fund outperformed 93 percentile of funds in the similar category during the same period.