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Shankaran Naren Investment Tips: S Naren, Chief Investment Officer of ICICI Prudential AMC, has warned investors that they have to be very careful in investing money in the market today. The market has now entered a new phase, where all the risk has shifted to investors.
New Delhi. Stock market veteran and Chief Investment Officer of ICICI Prudential AMC Shankaran Naren has issued an eye-opening warning to Indian investors. He has said that India’s capital i.e. stock market has entered a new phase. Now the entire burden of risk is on investors and not on banks and institutions. What he clearly means is that now all the market risk is only on the investors and not on the companies or institutions associated with it.
Speaking at the Morningstar Investment conference, Naren said that in earlier times, development capital investment was financed by financial institutions like IDBI, IFCI and ICICI. Then came the period of 2007-08 where it was financed by banks. Now the challenge for the entire investor community has entered a new phase. Now all the risk is being taken by the investors. Banks are not lending for any risky work.
The onus is on investors to take risks
Naren said that today no financial institution is ready to take risks on its own and the onus is on investors to take risks for the development of the country. To provide some relief to investors, mutual funds have created sections like small cap, mid cap and multi cap. Despite this, in view of the increasing demand from investors, fund managers often have to invest in expensive stocks. If investors’ SIPs are in expensive midcaps, then fund managers will also have to invest money in expensive midcap stocks.
Investors’ mind changes as soon as the market falls
Naren expressed concern that many investors may have long-term goals but are forced to withdraw their money as soon as the market falls. Even investors who aim for 20 years are often not able to last for 10 years. Looking at the high valuations and the selling sequence of equity investors, it is a clear indication that informed investors exit at higher valuations, while retail investors continue buying. This is the reason why only small investors have to suffer losses due to high valuation.
Focusing only on equity is a big problem
Naren said that the biggest problem of investors is that they focus only on equity. He said that investors will have to diversify their portfolio and instead of focusing only on equity, they should also include options like debt and balanced funds. If investors invest everything in one section, then the possibility of loss will also be high, but if the assets are allocated separately, then big losses can be avoided.
