Asset allocation helps investors view volatility as opportunity, says Sankaran Naren
The ICICI Prudential AMC executive director highlighted geopolitical issues and AI as key factors impacting market returns.
Sankaran Naren, Executive Director and Chief Investment Officer at ICICI Prudential AMC, said that practicing asset allocation allows people to view volatility as an opportunity rather than a cause for worry. Speaking to Sandeep Singh of The Indian Express on October 27, Naren noted that equity is not a riskless asset class.
Naren identified several reasons why markets have not delivered returns, including overvaluation three years ago and geopolitical problems such as the wars in Ukraine and the Gulf. He also cited record high crude oil prices and high artificial intelligence (AI) related growth in countries like the US, South Korea, Taiwan, and Japan.
The executive director stated that since March 2023, three groups of investors have been selling stocks: Indian promoters launching IPOs, private equity companies, and multinationals listing in India to gain higher valuations. He said that despite large amounts of money collected, much of it went to these three groups.
Regarding long-term concerns, Naren said he is worried about the potential positive or negative impact of AI on India. He described AI as a structural trend with an unknown long-term impact. He also noted that while India faces intense competition in manufacturing from countries like Vietnam and Thailand, it remains a leader in the services sector.
Naren suggested that if the US-Iran war ends and oil prices fall, sectors such as banking, oil marketing companies, and aviation could benefit. He added that a fall in oil prices would reduce the requirement for the Reserve Bank of India (RBI) to hike interest rates.