ICICI Pru CIO Warns Against Small-Cap, Mid-Cap SIPs

S Naren, Chief Investment Officer of ICICI Prudential Mutual Fund, advises caution on SIPs in small-cap and mid-cap stocks. He suggested exiting these funds due to overvaluation. The median Price-to-Earnings (P/E) ratio for mid- and small-cap stocks has hit an unsustainable 43x. Retail investors face more risk as companies raise funds directly through IPOs and QIPs.

Naren’s comments reflect concerns over potential corrections in these segments. He emphasized the need for investors to adopt a cautious approach and consider reallocating investments to other segments with more reasonable valuations. Naren also suggested focusing on long-term growth prospects and fundamental strengths of companies when making investment decisions.

The advice comes at a time when the Indian stock market is experiencing significant volatility, and investors are seeking safer investment avenues. It is crucial for investors to stay informed and make well-considered decisions in this dynamic market environment.