Sankaran Naren, Chief Investment Officer of ICICI Prudential Asset Management, maintains a bullish stance on banks, power utilities, oil refiners and pharmaceuticals, citing attractive valuations and improving earnings despite global uncertainties. According to reports from The Economic Times, the fund manager emphasized that banking remains one of the most attractive sectors in India, with the company managing approximately ₹11.8 trillion ($123 billion) in assets, where equities comprise over two-thirds of the total portfolio. Naren, one of India's longest-serving fund managers who popularised contra and value investing in the country, continues to favour these sectors as corporate earnings show signs of recovery.
The improving earnings outlook has supported the benchmark Nifty's advance for a second consecutive month, with more than half of the 34 NSE Nifty 50 companies that reported June-quarter results beating profit estimates, as reported by Bloomberg. Materials, utilities and financial services sectors have led the turnaround, with the NSE Nifty Bank index rebounding more than 13% from bear-market territory, though it still trades at nearly a 20% discount to its long-term price-to-book value. The advance has also been assisted by a revival in foreign inflows and a recovery in the nation's beaten-down software stocks as investors rotate out of chip shares elsewhere in Asia.
Despite the positive earnings momentum, Naren cautioned that spike in Brent crude prices above $90 per barrel poses a significant risk to the market recovery. As reported by The Economic Times, he stated that "if you have earnings growth improving but the macro risk increases — if crude goes to $100 — the market will assign a lower valuation." The fund manager emphasized that "you need a situation where earnings are improving, and crude and monsoon are comfortable" for sustained market performance. This risk assessment comes as the spike in crude oil prices could weigh on market valuations even as corporate profits recover.
Reflecting his bullish outlook, Naren's $9 billion ICICI Prudential Multi Asset Fund, which has beaten 95% of peers over five years, remains overweight on lenders and has added Kotak Mahindra Bank, HDFC Bank and Union Bank of India in recent months. According to The Economic Times, he noted that "prolonged foreign selling has left many large-caps trading at appealing multiples." Outside financials, Naren sees opportunities in power and pharmaceuticals, betting on rising electricity consumption spurring investment in generation and transmission grids, while drugmakers benefit from globally competitive exports and growing domestic healthcare demand. As reported by ETMarkets, Naren emphasized that "Pharma has consistently delivered for us. We continue to find the sector attractive."
