In a significant advisory for retail investors, Sankaran Naren, the Executive Director and Chief Investment Officer at ICICI Prudential Mutual Fund, has cautioned against making standalone investments in gold and silver at current price levels. He emphasized that exposure to these precious metals should ideally be taken through multi-asset strategies or asset allocation funds, rather than as direct, singular bets.
Equity Focus Amid High Valuations
Naren's comments came during an interview where he addressed the market outlook for 2026. He pointed out that with elevated valuations and a fresh supply of equity likely to moderate market returns, investors should consider equity schemes that offer flexibility across sectors and market capitalizations. He also recommended asset allocation schemes with a greater tilt towards equities.
On corporate earnings, Naren expressed a positive outlook for FY26, citing the benefits of lower interest rates, GST rationalization, and income tax cuts announced in the previous budget. He noted that the Nifty 500 (ex-Nifty 50) PAT saw a rise of 30.7% in Q2FY26, setting a strong base.
Risks and Opportunities for Indian Markets
Naren identified the biggest risk for 2026 as a potential correction in global stocks, which are trading at their highest valuation as a percentage of GDP in the last decade. Such a correction could have spillover effects on Indian markets.
However, the opportunity lies in India's attractive tariff regime, continued low oil prices, and its position as one of the highest-growth stories globally. He expects India to deliver stronger earnings growth compared to other nations. A major trigger being closely watched is the impending Indo-US trade deal, which Naren believes could lead to a meaningful appreciation of the rupee, which he views as undervalued currently.
Precious Metals: A Cautious Stance
Elaborating on his warning against precious metals, Naren explained that assets like gold and silver are difficult to value as they lack traditional metrics like earnings or dividend yield. Analysts often rely on imperfect ratios like Nifty-to-Gold. At current levels, these ratios do not make precious metals appear attractive for standalone investments.
For retail investors, Naren reiterated that the ideal asset allocation between equity, debt, and other assets depends entirely on an individual's risk profile, time horizon, and financial goals. His fund house remains incrementally constructive on equities.
On the increasing competition in the asset management space, Naren stated that ICICI Prudential's focus remains on managing all its schemes in line with their stated objectives, trusting that consistency will retain investor confidence.
