US 10‑year Treasury yield hits 5.6%—the highest since 2007—while oil prices hover above $90 a barrel, a double‑whammy that has pulled capital out of emerging markets. According to CNBC‑TV18, S Naren of ICICI Prudential AMC warned that the risk‑free rate surge is tightening the margin for Indian equities.
Indian IPOs have already raised more than ₹1 lakh crore in 2026 across 80-plus issuances, flooding the market with new equity paper and choking mutual‑fund inflows, Naren said. The sheer volume of fresh listings—over 1,200 seats at an average price of ₹1,200 per share—has outpaced the net inflow into domestic equity funds by roughly 30%.
Naren urged investors to pivot from pure equity chasing to a balanced, asset‑allocation framework, citing that large caps sit at reasonable valuations with moderate growth, while mid‑caps remain over‑priced. He cautioned that the prevailing belief in 15‑20% annual alpha is unsustainable in the current environment.
The fund’s contrarian play is insurance, a sector that has been out of favour for years. Shares of PB Fintech and Turtlemint have shed more than 40% each in just four sessions since the IRDAI draft guidelines, creating a buying window for long‑term investors, said Naren.
ICICI Prudential is launching a Contra fund under its proprietary CLOUD framework, targeting higher upside while avoiding highly leveraged or over‑owned firms. The strategy will roll out next month, with a target AUM of ₹10,000 crore by year‑end, according to the company’s filing.