Market Today Summit: How to reduce risk of high valuations, Sankaran Naren of ICICI Prudential AMC decodes

Systematic investment plans (SIP),  asset allocation and investment in debt mutual fund are the three routes through which risk of higher valuations can be reduced during the current market conditions, said Sankaran Naren, ED and CIO, ICICI Prudential AMC during Business Today’s first ever Market Summit held in Mumbai today.  

Addressing a session on future trends in mutual funds, Naren said domestic investors have become a big force and have been able to withstand huge selling from FIIs. However, the only debate which keeps happening is high valuations. The negatives of high valuations are yet to be accounted for.   

Speaking about mutual funds, Naren said the general mood is very optimistic in the industry due to the way the SIP investment has happened and the kind of products investors are being offered.  

 According to reports, contributions to mutual fund schemes through systematic investment plans or SIPs remained unfazed from the market volatility in 2022 with inflows rising to Rs 1.5 lakh crore last year, a surge of 31 per cent from a year earlier, due to higher retail participation. Inflows of Rs 1.14 lakh crore through the SIP route were registered in 2021 and Rs 97,000 crore in 2020, data with the Association of Mutual Funds in India (AMFI) showed. 

Prashant Jain, director and fund manager, 3P Investment Managers also said valuations have been on the higher side. On the other hand, Jain said Indian market offers a significant compounding story for investors. 

Sundeep Sikka, ED and CEO, Nippon Life India AMC was of the view that outlook on corporate India remains positive. In the mutual fund industry, investors have started taking a very long-term view in their investment decisions. The quarterly earnings are very important and are needed to be monitored closely.  

Investors have matured a lot and short-term volatility in quarterly earnings will not distract the mutual; fund industry from investing in good companies, added Sikka.  

Speaking in the same session, Rajeev Thakkar, CIO and director PPFAS Asset Management said the        PSU space has been underperforming for two decades now. This time, the privatization intent seems to be real. The Air India privatization has actually happened. In the PSU space, the asset valuations are very attractive and in some case there are monopoly and oligopoly businesses. With some significant changes in management, that is one space to watch out for.  

Meanwhile, Business Today on Tuesday launched the new Markets Today page.

The Market Today page offers unmatched coverage of stock markets both during and after market hours. From complete stock data to brokerage reports and stock stories to market perspectives, the Market Today page is a one-stop shop for both momentum and long-term investors. Over 4,000 company pages have gone live on BT.in. Each page contains information about stock movement, financial analysis, ratio analysis, technical analysis, shareholding pattern, bulk deals, block deals among other key important data, which is valuable for taking a prudent investment decision.

The company pages also give readers access to cutting edge research tools such as SWOT Analysis and QVT stock score.  SWOT analysis comprises ranking a particular stock in terms of strengths, weakness, opportunity and threats. QVT stock score assigns scores on the basis of quality, valuations and technicals.

Also Read: Market Today Summit LIVE: Be honest to yourself as an investor, says Nilesh Shah