Where is Gautam Sinha Roy of ICICI Pru Life Insurance investing now?

As a strategy, we prefer domestic-focused sectors like BFSI, Consumption, Industrials, Healthcare, and Telecom, says Gautam Sinha Roy, equity & fund manager at ICICI Prudential Life Insurance.

GAUTAM SINHA ROY, chief - equity & fund manager at ICICI Prudential Life Insurance, tells Puneet Wadhwa in an email interview that in their balanced advantage fund, they had increased cash to around 30 per cent (highest limit being 35 per cent), which is now being redeployed gradually. Edited excerpts:  Geopolitical issues and trade war aside, have the earnings recovered meaningfully to take the markets higher?  Amidst a tense and volatile geopolitical environment, March 2025 quarter (Q4-FY25) earnings have come in marginally better-than-expectation. The Nifty-50 earnings are projected to grow by CAGR of 11 per cent over the next two years (FY25-27E). Going forward, economic indicators will gradually improve, given better liquidity conditions enabling higher credit growth and lower fiscal drag.  While global concerns can continue to impact earnings of sectors like information technology (IT) and Pharma, domestic sectors like Financials, Industrials, Consumer and Utilities are likely to do better. The impact of the tax cut offered in the current year's budget should create positive demand impetus in the economy.  ALSO READ | India most preferred Asia-Pac equity market: BofA Securities FMS survey  What has been your investment strategy since October 2024 when the markets started to slip?  In pure equity funds, we remain invested in stocks almost fully as a policy. This is because of ULIPs being a long-term investment vehicle where customers invest money in instalments over a 5-7 year period. In our balanced advantage fund, we had increased cash to around 30 per cent (highest limit being 35 per cent), which we are now redeploying gradually.  Also, we believe that the domestic slowdown is more transient in nature; and the trade war risk may not sustain for long given high US current inflation, fiscal deficit and debt levels. Fiscal tightening (in the form of delayed capex spending by the government due to union & state election) and monetary tightening (due to tight banking liquidity and higher risk weights on NBFC & MFI) were the key reasons for domestic slowdown.  What's your view on FII and DII flows?  DII flows have remained strong, on the back of sustained retail investor inflows, despite net SIPs falling. We believe the trend will continue, as investors continue to fund their retirement needs through higher equity allocation.  FII inflows have risen in the last two-three weeks, and that is driven by weakness in the US dollar, driving flows from Developed Markets (DM) to Emerging Markets (EM) funds. Their inflows can persist in the near-term. In the long term, India’s better growth prospects should continue to attract FIIs.  ALSO READ | We see India as a relatively bright spot: BlackRock Investment's Vivek Paul  Are valuations enticing enough to buy mid, smallcaps?  The Nifty Midcap-100 and Nifty Smallcap-100 indices still trade at significant premium to their 10-year averages, respectively, even after some correction. In contrast, the Nifty-50 trades, a small premium to its 10-year average. Given the rich valuations, we prefer large-caps over mid-and small-caps and favour names where earnings growth remains strong.  Is it a good time to increase allocation to high beta sectors from a 12 – 18-month perspective?  Long-term investors in India have seen that the country offers great bottom-up long-term growth opportunities, and we are first and foremost focussed on seeking such opportunities. Such opportunities today are in financials, manufacturing/industrials (including defence/Make in India), discretionary consumption and in technology platform businesses, amongst others.  As a strategy, we prefer domestic-focused sectors over other themes i.e. BFSI, Consumption, Industrials, Healthcare, and Telecom. In the next 12-18 months, we expect sectors that are linked to domestic factors will do well, given receding cyclical domestic headwinds (monetary, fiscal). When the geopolitical and global growth uncertainties recede, we will seek good opportunities in global cyclicals.