Equity Not a Low-Risk Asset: ICICI Pru's S Naren Warns of Overvaluation and Emphasizes on Asset Allocation

Indian stock market is seeing high-profile IPOs and expensive valuations. CIO S Naren of ICICI Prudential AMC warns that flows can determine valuations for 2-3 years, but in the long run, valuations matter more than flows. Naren advises investors to avoid overvaluation of loss-making companies and to allocate assets across debt, gold, and REITs. He emphasizes that equity is not a low-risk asset class and advises investors to look at stable large-cap companies for lower-risk returns.

Title: Indian Stock Market: Navigating High-Profile IPOs and Valuations

The Indian stock market has been abuzz with high-profile IPOs and expensive valuations, reflecting strong market interest and investor optimism. However, with the recent surge in valuations, investors are advised to approach the market with caution. CIO S Naren of ICICI Prudential AMC has warned that while flows can determine valuations for the next 2-3 years, long-term valuations matter more [1].

NSDL Shares Surge

NSDL shares have surged nearly 80% since its IPO, indicating robust market interest and positive performance across trading sessions. The IPO, valued at a P/E of 46.63, witnessed substantial oversubscription across all investor categories. Analysts recommend holding for allotment recipients with a long-term view, while suggesting others await a market dip before entering [1].

Zerodha and Perplexity AI Collaboration

Zerodha cofounder Nikhil Kamath and Perplexity AI CEO Aravind Srinivas exchanged messages hinting at a collaboration to integrate Indian stock market data into Comet, Perplexity’s AI-powered browser. This move could transform how investors access market information online. A call scheduled for Monday could mark the start of a partnership [2].

ICICI Bank Fined by RBI

The Reserve Bank of India (RBI) has imposed a financial penalty of Rs7.5m on ICICI Bank for regulatory non-compliance. The fine has been imposed due to the bank’s failure to adhere to specific directives regarding property valuations and current account standards [3].

Plains All American Pipeline (PAA) Divestiture

Plains All American Pipeline (PAA) reported a Q2 2025 earnings beat despite a 15% revenue decline, driven by its $3.75B Canadian NGL divestiture. The sale eliminated a volatile, margin-depressing segment, redirecting capital to core crude oil infrastructure and stabilizing free cash flow. PAA's leverage ratio improved to 3.3x, with proceeds allocated to acquisitions, unit repurchases, and buybacks to enhance unitholder returns [4].

Investment Advice from CIO S Naren

CIO S Naren advises investors to avoid overvaluation of loss-making companies and to allocate assets across debt, gold, and REITs. He emphasizes that equity is not a low-risk asset class and advises investors to look at stable large-cap companies for lower-risk returns.

Conclusion

The Indian stock market is seeing significant activity with high-profile IPOs and expensive valuations. While these developments indicate strong market interest, investors are advised to be cautious and consider long-term valuations. The recent collaboration between Zerodha and Perplexity AI, along with regulatory fines for ICICI Bank, highlight the importance of staying informed and adhering to market regulations.

References

[1] https://timesofindia.indiatimes.com/business/india-business/nsdl-stock-jumps-78-from-ipo-price-gains-in-all-sessions-since-debut-what-should-investors-do/articleshow/123231586.cms
[2] https://economictimes.indiatimes.com/news/new-updates/nikhil-kamath-and-perplexitys-aravind-srinivas-spark-a-tweet-thread-that-could-shake-up-indias-stock-market-updates/articleshow/123215853.cms
[3] https://www.retailbankerinternational.com/news/indian-central-bank-fines-icici-bank/
[4] https://www.ainvest.com/news/plains-american-q2-earnings-beat-revenue-decline-strategic-divestiture-driven-turnaround-2508/