S Naren: Banks with a good CASA franchise are in a great position

New Delhi: S Naren, CIO, ICICI Prudential Mutual Fund shared his outlook on the Indian markets saying that India has displayed much lower volatility because neither India’s central bank nor the Government of India indulged in so many excesses. “We are definitely much lower beta than the global markets. Having said that, I think the real problem that our country has faced is arising out of higher crude prices out of this entire Ukraine issue.”
Naren recommends investors invest in the debt category as he believes it is the only category which gains out of increasing interest rates. “We continue to think that within asset allocation and within that in debt floating, interest becomes one of the biggest categories to benefit. There is no sign at this point in time that interest rates would not keep going up. Cash of course is attractive, but you will benefit from increasing interest rates everywhere in the world. So you choose that category and that is what we have made, we have been trying to tell investors to look at that category.”
Sharing his views on the ICICI Pru Transportation and Logistics Fund, Naren said there is a good scope for transportation and logistics which are all base needs. “PSUs had underperformed for a decade despite profits being high. India and every other country are talking about China plus one and now Europe plus one. Both China plus one and Europe plus one mean that logistics have to grow over the next decade or the next few decades. So we were looking for such a theme and we approached the regulator to give us permission to launch such a scheme,” he said.
Naren sees merit in the financial sector saying credit growth has been good for 10 years for banks but had NPA issues persisted now along with credit growth, NPA issues have receded and banks have pristine balance sheets. “Within the financial services sector, banks with a good CASA franchise are in a great position and we have reasonable weightage here.” He is a believer that recession-free exporters look promising and hence pharma as a sector looks attractive. “Within the Power sector, our weightage is higher than the benchmark, and we have trimmed positions here slightly.”
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