Will deploy money gradually, add on further corrections: Jitendra Arora

Metro India News | NEW DELHI

Jitendra Arora, Chief – Equity at ICICI Prudential Life Insurance, believes that while markets have undergone significant correction, they may not have bottomed out yet. He says a large part of the pain is behind us, but an immediate rebound is unlikely. According to him, markets could drift sideways for another quarter or two, with intermittent corrections triggered by domestic or global events. Despite this, Arora plans to deploy incremental money into equities and continue investing on further corrections.

He explained that the rally post-COVID was driven first by top-line recovery and then by strong profit growth, leading to peak valuations by FY25. However, excesses have been corrected over the last six months, especially in the broader market amid sustained FII selling. While he does not expect a sharp uptrend from current levels, he believes this is a reasonable time for investors with a longer horizon to accumulate equities.

Arora emphasised that asset allocation depends on time horizon and risk appetite. He does not recommend equities for investors with a one-year horizon. However, for those with a two- to three-year outlook, equities remain one of the best asset classes. He reiterated the importance of disciplined asset allocation aligned with long-term goals.

From a portfolio perspective, ICICI Prudential Life Insurance has traditionally focused on largecaps, which helped manage volatility. However, Arora now sees emerging opportunities in select midcap and smallcap stocks, where valuation excesses have been removed. He describes the current phase as a bottom-up stock pickers’ market, rewarding clear investment hypotheses and patience over 18–24 months.

Sectorally, he prefers domestic-focused themes, particularly financials. Banking and NBFCs look attractive as RBI moves to ease earlier restrictions and normalise liquidity. Insurance, despite regulatory pressures in recent years, continues to post healthy growth and offers value after sharp corrections. Overall, he is constructive on financials.

On risks, Arora flagged earnings downgrades as a key concern after strong upgrades between FY22 and FY24. Companies with elevated profitability assumptions could see further corrections. Global risks, including potential US tariff actions and broader volatility, may also impact markets.

Regarding PSU stocks, he noted that while many have halved from their peaks, some still trade above CY23 levels. Opportunities exist selectively where growth visibility is strong and valuations are reasonable.