Small, Mid Caps Biggest Contrarian Play For ICICI Prudential AMC
People look up at a screen and an electronic ticker board outside the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Small, Mid Caps Biggest Contrarian Play For ICICI Prudential AMC

The biggest contrarian strategy at ICICI Prudential Asset Management Company is betting on the mid- and small-cap stocks.

That’s according to Anand Shah, head of portfolio management and alternate investment fund at the asset manager, who said small and medium-sized businesses that have survived disruptions like the goods and service tax and the pandemic clearly indicate their strong fundamentals and offer a huge value.

“There’s a lot more alpha and a lot more intrinsic value in the small- and mid-cap space versus the current price at which they are trading,” he told BloombergQuint’s Niraj Shah in an interview.

Stock picking, he said, must be done with caution since companies in this space may not have the best in-class management and balance sheets, adding a bottom-up investing approach would be suitable.

Addressing the frenzy surrounding rising U.S. yields, commodity inflation and rising crude oil prices, Shah said short-term market corrections don’t worry him and he’d focus on the underlying fundamentals.

“India’s fundamentals exhibit firepower to support long-term market growth,” he said, citing its demographic history, consumption levels and fiscal deficits provided by the budget to support infrastructure growth as indicators.

Other Portfolio Picks

Shah said he’s looking to include metal stocks in his portfolios as the sector stands to gain from increasing commodity prices, helping them pare debt.

He also expects banks to be primary beneficiaries of economic recovery and the large provisions will help them emerge stronger.

Watch the full interview here:

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