Invest in hybrid, multi-asset, large-cap schemes post Budget: ICICI Pru MF

Uncertainty surrounding newly elected US government's trade policies led to massive selling by FIIs of Rs 780.3 billion, leading to a further fall in market.

With the stock market expected to remain volatile this year due to various macroeconomic factors, ICICI Prudential Mutual Fund has advised investors to park funds in Hybrid and Multi Asset allocation schemes along with staggered investment in large cap schemes or schemes with flexible investment mandate that can take high large cap exposure. 

Softer-than-expected corporate earnings, persistent foreign fund outflows, weak global data, and rising economic uncertainty led the Indian stock markets into a four-month losing streak in January 2025. Both benchmark indices declined about 2% each in Jan-25 as compared to Dec-24. As per the brokerage:

•  Some losses were triggered by the new HMP virus scare.
• The release of weaker-than-expected services PMI data also led to some losses
• Furthermore, weak global trends and a rapidly depreciating Indian rupee also exerted downward pressure on the Indian bourses. 
• Some gains in the market were seen after government data showed that retail inflation had eased in Dec-24. The US government's announcement of significant investments in AI also led to some gains.
• All key sectoral indices encountered a monthly fall as compared to Dec-24. Biggest loser was BSE Realty index, which shed 16% value, followed by BSE Consumer Durables, which lost 11%. 

 

 

ICICI Prudential Mutual Fund's view going forward:

•  We continue to believe in India’s long-term structural story despite global uncertainties.
•  The Union Budget 2025-26 has reaffirmed our view as it focuses on consumption revival, fiscal prudence, export promotion, tax
• rationalization and boosting domestic manufacturing.
• We believe the rejig in income tax slabs should help the middle class with additional disposable income.
• However, On the equity side, Large caps have suffered off late due to aggressive FPI selling, which makes them reasonably valued. Valuations in the Mid & Small cap space continue to remain high.
• We recommend investing in (a) Hybrid & Multi Asset allocation schemes and (b) staggered investment in large cap schemes or schemes with flexible investment mandate that can take high large cap exposure.

Its recommendation include:

To invest across Asset Classes, Market Cap & Sectors/ themes

 

Asset Allocation Flexibility Flexibility 

HYBRID

 

1. ICICI Prudential Equity & Debt Fund

2. ICICI Prudential Multi-Asset Fund

3. ICICI Prudential Balanced Advantage Fund

4. ICICI Prudential Equity Savings Fund

5. ICICI Prudential Asset Allocator Fund (FOF) 

Thematic funds:

1. ICICI Prudential Business Cycle Fund

2. ICICI Prudential Flexicap Fund

3. ICICI Prudential Thematic Advantage Fund (FOF) 

SIP/STP Strategy

 

Continue SIP/STP as the long term structural story of India remains intact

 

Recommended Schemes

1. ICICI Prudential Value Discovery Fund

2. ICICI Prudential India Opportunities Fund

3. ICICI Prudential Large & Mid Cap Fund

4. ICICI Prudential Multicap Fund

5. ICICI Prudential ELSS Tax Saver Fund

6. ICICI Prudential Focused Equity Fund 

"The Union Budget 2025-26 was clearly a confluence of consumption push (through personal income tax benefit) and capex moderation with Fiscal Prudence taking precedence over growth. Nonetheless, the government continued with broader objective of focus on tax simplification, MSME, investment in skill and technology. We note that FY26 Capex allocation of ₹ 11.2 lakh crore, growth of 9.8% YoY over FY25RE is a bit modest, albeit, clearly reflects the government commitment towards fiscal prudence (with Fiscal deficit pegged at 4.4% in FY26 vs. 4.8% in FY25RE), despite growth moderation.

 

To encapsulate, given the consumption focused budget, we might see pickup in consumption pockets given the tax relief, while capex space is likely to witness only a selective move, ahead," said  Pankaj Pandey, Head of Research, ICICI Direct.

 

Disclaimer: Mutual Fund investments are subject to market risks. Please read the scheme-related documents carefully before investing. Past performance is not indicative of future results. The value of your investment may fluctuate depending on market conditions, and there are no guarantees of returns.