ICICI Prudential AMC's Rajat Chandak Bullish on Indian Stocks Despite Global Volatility
Rajat Chandak, the Senior Fund Manager at ICICI Prudential AMC, remains optimistic about the Indian stock market. He believes global uncertainties will not derail its broader trajectory. In a recent interview, Chandak highlighted steady earnings growth and a supportive policy environment as key factors helping the market navigate headwinds.
Domestic Market Outlook for 2026
Chandak addressed concerns about geopolitical developments and a delayed India-US trade deal. He stated that while global uncertainties can cause intermittent volatility, they are unlikely to disrupt the market's overall direction. The domestic market's underlying fundamentals remain relatively resilient, he emphasized.
India's growth drivers are increasingly localized. Consumption, public capital expenditure, and private sector balance sheets are in a much healthier position than in past cycles. Policy measures aimed at boosting consumption and improving rural demand provide a meaningful cushion. Over the medium term, steady earnings growth and supportive policies should help markets manage global challenges.
Asset Allocation and Equity Strategy
When asked about increasing exposure to gold and reducing equities based on last year's performance, Chandak advised against sharp shifts. Asset allocation decisions should focus on long-term objectives rather than recent performance. He believes equities remain the most effective asset class for long-term wealth creation in India's structurally growing economy.
Regarding equity investment strategy, Chandak noted that valuations are not cheap across market capitalizations. However, select pockets in mid- and small-cap segments offer attractive valuations on a relative basis. The optimal approach involves diversified equity funds, particularly flexi-cap funds with flexible mandates. Conservative investors or those making lump sum investments might consider hybrid offerings. Diversification across asset classes is crucial.
Sectors Poised to Endure Volatility
Chandak identified several sectors well-positioned to handle market volatility:
- Large banks: Reasonable valuations and improving growth prospects make them attractive.
- Automotive industry: Expected revival in discretionary spending should benefit this sector.
- Platform and internet-based companies: These continue to deliver consistent growth.
- Life insurers: Structurally well-positioned due to India's low insurance penetration.
- IT sector: Downside risks appear limited as valuations reflect near-term uncertainty.
Investment Style and Fund Preferences
On the debate between value and growth investing, Chandak recommended a blended approach. A focus on bottom-up stock selection is more appropriate in the current environment. Investors should target businesses with reasonable valuations relative to their long-term earnings potential.
Given prevailing uncertainties, flexi-cap funds are a good option. Their built-in flexibility allows fund managers to invest across market capitalizations and respond dynamically to changing conditions. This agility helps balance the stability of large-cap stocks with the growth potential of mid and small-cap stocks during volatile times. Investors seeking diversified equity exposure can consider flexi-cap funds, provided they have a reasonable investment horizon.
Chandak's insights underscore a cautious yet confident stance on India's equity markets, emphasizing diversification and long-term planning.
