Sankaran  Naren, ICICI Prudential's veteran CIO, is increasing his exposure to Indian large-cap stocks, citing valuation challenges rather than macroeconomic issues. Despite concerns about US tariffs, he remains cautiously optimistic and prefers a balanced investment strategy.

S Naren, a veteran money manager and CIO at ICICI Prudential, said his fund is increasing exposure to largecap companies at a time when global markets are assessing the impact of upcoming US reciprocal tariffs on trading partners, and the extended selloff in Indian equities is showing signs of bottoming out. Naren, who manages over $100 billion in assets, told Bloomberg News in an interview that "India does not have a macro problem, it has a valuation problem."

The top money manager stated that the Indian equity market is not in a fundamental crisis, but high valuations pose a challenge. Naren advised investors to avoid taking on too much risk in their portfolios by indiscriminately investing in equities, and instead advocated for a balanced portfolio approach.

On market sentiment, Naren stated that Indian stocks are less 'irrational' now than they were six months ago. "At the same time, they are not mouthwatering to buy," he told me. Largecap stocks appear to be more stable, according to Naren, as evidenced by the Nifty 50 remaining relatively unchanged for the year compared to the Nifty Smallcap 250 Index declining by 14%.

On key risks, Naren identified climate change, US tariffs, geopolitical issues, and advances in artificial intelligence as potential influences on global equities in the coming years. He emphasized the importance of exercising caution when adding exposure to largecaps, stating that the current environment necessitates a prudent and selective investment strategy.

The Nifty has reclaimed the 23,500 level in March, and some experts predict further gains from here. Key indices are expected to reverse their recent monthly losses as foreign inflows resume.