ICICI Prudential AMC's S Naren in an interaction with CNBC-TV18 today said India is well positioned, but also does sounds cautious and does not believe in large market rallies this year. He feels Indians banks are reasonably valued currently and most mutual funds have a high holding in the sector of 25 to 30 percent. ICICI bank and HDFC Bank are among the top 10 holdings in ICICI Pru Balanced Advantage fund. He further adds “for banks to perform, it is important to not have any credit events, which is going to be a challenge”.

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Auto is another sector which he finds attractive. “Of all the consumer discretionary stocks, this is one sector which in the last decade has seen low growth, so future implied assumptions are reasonable. The two wheeler industry, in particular, is reasonably valued compared with other consumer discretionary industries”.

Alongside, S Naren sees upside potential in the telecom sector, with expectations of rise in Average Revenue Per User (ARPU) over the next two to three years. He says the timing of ARPU rise cannot be judged in the near term, but is certain to increase over the next two to three years.

He further adds, IT services players to see a re-rating, while the pharma sector has scope for returns in the medium term. The new age companies are a good bet for investment if available at a comfortable price. “If new age companies come at reasonable valuations, it is good to consider those”.

The FOMC meeting is due today and S Naren says until interest rate hikes take a pause, we are in a moderate return world and investors should not expect high returns from equities this year. “I am not a bear, but I believe in moderate equity returns”.

First Published:Mar 22, 2023 4:14 PM IST