Market neither in greed nor fear zone as valuations have moderated but still not attractive: S Naren

Markets globally are on a correction path after running up in the early part of the year due to factors rising crude prices, high inflation, rate hikes and geopolitical tensions due to the Russia-Ukraine war. ICICI Prudential AMC believes that this is a passing phase and its long-term market outlook continues to be positive.

S Naren, the ED and CIO at ICICI Prudential AMC spoke to CNBC-TV18 to throw more light on how to navigate the current market scenario and said that the Indian market after the corrections is neither in greed nor in a fear zone.

This is because valuations have moderated from their recent peak but it is still to get attractive. Therefore, the mutual fund says that this is a compelling case for investing in floating interest rate bonds and funds.

As far as sectors are concerned, IT valuations are reasonable now, according to Naren but the sector will become attractive after some more correction.

“Now with IT valuations have been corrected, they are reasonable, but is the IT sector still dirt cheap? The answer is no, it is still a semi-growth industry. .. Without the IT industry, India would be in much bigger economic trouble. It is USD 10-12 billion of IT exports per month, which is actually helping India at this point,” he said.

Naren suggests that the government can ask upstream oil companies to declare high dividends as this will lead to a win-win situation for the government, companies and the shareholders.

“We have been believers in upstream oil as a sector and when we look at shareholding patterns on upstream oil, what we find is people believe that we do not require oil to run our cars. Buts it’s a sector which trades at a 4-5 PE multiple (price to earnings) and the fact is that that is a contrarian theme, which I find that no one is willing to look at because finally at the end of the day, we are not ‘oil mukt’ – that’s the reality,” he explained.