S Naren on why recent equity correction isn't cause for major worry
«Because if you look at it smallcap or midcap have not corrected in India significantly mainly because they do not own it. So, the selling has been completely in largecaps, both in 2021-22 and now,» says S Naren, ED & CIO, ICICI Prudential AMC.
What is happening in the market? Why there are so many moving parts?
S Naren: Actually, on the eve of Diwali, we had to give an interview where we told people that equity is not bank FD because the problem is there was a period of time from 2020 to 24 where people have thought that equity market is bank FD, at least after this correction no longer do people think that equity risk is equal to bank FD risk.
So, I think that is necessary. But the reality is that global funds are the main reasons for this correction. There have been two times they have sold, once in 2021-22 and the second time in the last 30 to 45 days.
And both of them they have sold for reasons which are international, I think strong dollar, they wanted to take the money back to the US, etc. So, it has got less to do with Indian macro fundamentals or something like that.
Because if you look at it smallcap or midcap have not corrected in India significantly mainly because they do not own it. So, the selling has been completely in largecaps, both in 2021-22 and now.
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