Investors Should Bet Against Market Trends: ICICI Prudential AMC's S Naren | NDTV Profit Ignite

Investors should not blindly follow market trends and invest only after studying stock valuations and checking a company's growth prospects, S Naren, Executive Director and Chief Investment Officer of ICICI Prudential Asset Management Company, said on Wednesday.

Speaking at NDTV Profit Ignite: Diwali Edition, Naren said investors should look at valuations, market sentiment and asset allocation before making investment decisions.

Naren said some large-cap stocks have become cheaper after years of weak performance. However, investors must also check whether these companies can deliver steady growth over the next two to three years.

On how investors should balance value and growth, Naren said investors often get carried away when a particular type of stock becomes popular. They believe its price will keep rising and buy it even when it becomes expensive. But market trends can change, and no investment trend lasts forever.

"Did people predict two years back that growth would disappear in some of the sectors which have done badly? The answer is no. I mean, maybe there are a few sharp people who predicted it. So, you know, we have gone through these phases," he said.

Value or growth: How should investors position themselves for the road ahead? At NDTV Profit Ignite: Diwali Edition, @alexandermats speaks to S. Naren, ED & CIO of ICICI Prudential AMC. #NDTVProfitIgnite #AlexMathew https://t.co/QJLwLUspAZ

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He said that in 2007, investors were willing to buy infrastructure stocks at any price. In 2015, pharma stocks were in demand, while in 2020, investors preferred quality stocks. "Today, investors are willing to pay high prices for growth stocks," he said.

"Instead of COP, now it has become GAP. So the challenge is, whatever becomes popular, at any price, you know, you bet against it as a contrarian. Because you know that nothing lasts forever," he said.

Naren further said investors who follow popular market trends may miss opportunities in other sectors. He recalled how investors strongly favoured quality stocks in 2020 but have since become less confident about their growth prospects.

"In 2020, you should have seen the amount of enthusiasm people have for quality stocks. But today, for six years, quality has delivered nothing. And today, you know, people say there's no growth there. Did people predict it six years back? The answer is no," he said.

"At that point in time, they said you should do only quality. You shouldn't touch PSU. You shouldn't touch telecom. You shouldn't touch this. You shouldn't touch that. You shouldn't touch power. Something different happens," he added.

Naren asserted that investors should study companies and be willing to go against the market's current preferences instead of following the flow of money.

"That's the advantage of investing. So you have to bet against the trend of the moment. You have to bet against the flows of the moment. You have to do your work. And then hope to make money in the long run," Naren said.