Anand Shah, Chief Investment Officer PMS & AIF at ICICI Prudential AMC explained that the recent market downturn was primarily due to excessive valuations, not fundamental economic weaknesses. He noted the extended period without a significant correction, which led to market exuberance. He emphasised that the sharp drops across smallcap, midcap, and largecap stocks have now brought valuations to more reasonable levels, making current market conditions more appealing for investment.
Moving forward, Shah mentioned the importance of selective stock picking over broad market bets. He said that even within sectors, performance will vary significantly, requiring a bottom-up approach to identify promising opportunities.
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Shah highlighted the manufacturing metals sector as an area of interest. He argued that China’s shift towards environmental regulations could reduce its competitive edge, potentially driving up global metal prices.
Shah believes that even though the economy in general will have an average growth, certain sectors will greatly outperform that average, and that manufacturing metals is one of those sectors.
Tawakley believes the Indian equity market’s major correction may have bottomed out, but emphasises a need for cautious optimism. He sees largecap stocks as reasonably valued but warns against excessive enthusiasm for smallcap and midcap stocks.
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Tawakley points out that largecap stocks offer a better risk-return trade-off compared to smallcaps and midcaps. He highlights that many smaller companies have inflated valuations and concerning balance sheet issues, making them riskier investments. He notes his own portfolio leans heavily into largecap stocks, even within funds designated for smallcap investments.
Tawakley downplays the potential impact of US tariffs on the Indian economy. He views tariffs as a “sideshow,” arguing that the Indian economy is resilient enough to withstand them. He also emphasises that tariffs create winners and losers within a country, not just between countries, and that domestic demand can offset any potential export decline.
For the full interview, watch the accompanying video
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