Equity markets globally at elevated levels; volatility to continue: S Naren

The coronavirus pandemic second wave has seen global markets, including the Sensex and the Nifty, witness volatility. Despite this, the Indian benchmarks have had a good run in the last six months clocking approximately 14 percent gains.

Speaking about the road ahead to CNBC-TV18, S Naren, ED & CIO of ICICI Prudential AMC, agreed that global markets across are at elevated levels but added that India is not a fragile economy.

“We are in a globally central bank-infused bull market. So as long as the central banks keep pumping, like the US central bank in a very buoyant economy keeps pumping USD 120 billion per month, this party will last. However, the day they say no, inflation is most important and we (the central bank) are going to tighten everything, at that point in time all the challenges will come,” he explained the bull run.

According to him, near-term economic revival will continue for some time but with volatility.

“We are basically believing that the next two years are going to be volatile because of US interest rates,” Naren said.

However, immediately there is nothing much to worry about. "Economies can operate differently from the markets. Markets at elevate levels globally and that’s the challenge currently and the global economy is booming at this point in time and that’s across sectors. Therefore, I don’t think there is any problem in the global economy in the near term,” said Naren.

According to the fund manager, the risks are going to come from the US and when it comes, there will be an impact all over the world.

"Unfortunately, we in India cannot predict and that’s the real problem at this point in time,” he said.

Naren is bullish on the pharma space and sees it having a bull run for a long time as a reduction in healthcare expenditure to gross domestic product (GDP) is unlikely over the next 10 years.

“I think it’s a secular space; who is going to be a gainer and who is going to be a loser, we can have these debates but I do not think healthcare as a percentage to GDP is going to go down in the next ten years. It’s going to go up substantially in the next 10-15 years,” Naren said.

For the entire interview, watch the video