ICICI Prudential AMC on Monday said that a wider asset allocation has become an important consideration for retail investors as corporate houses shift their capex funding from bank to capital market.

Sankaran Naren, executive director and chief investment officer, ICICI Prudential AMC, said a different capex cycle is being seen at present where corporates are looking to raise money from capital markets through initial public offers and qualified institutional placements.

“Entire risk of the investment this time is not with the banking system because banks are not completely lending for the corporate projects. Most of the risk this time is lying with the investor and, therefore, the investor must be careful,” said Naren.

“So, we have communicated to investors to consider asset allocation (as a strategy) which means that they can consider investing in a combination of equity, debt, Invit, Reit, gold, silver etc.,” he said.

This trend is also evident in the data. The year-on-year growth in bank credit to large corporates was 6.4 per cent in 2023-24 and in November 2024, it stood at a stable 6.13 per cent. In contrast, data compiled by Prime Database shows that 91 Indian companies have raised ₹1,59,784 crore through main board IPOs in 2024, more than 3 times of ₹49,436 crore mobilised by 57 companies in 2023. QIPs nearly trebled with 99 companies mobilising ₹1,37,662 crore in 2024.

Valuations expensive

As of December 2024, Nifty Midcap 100 price-earnings ratio (value of index against earnings) was 42.9 compared with 24.7 in December 2023. For Nifty Smallcap 100, the PE ratio was 34.7 in December 2024 compared with 28.7 in December 2023. In contrast, Nifty 100 PE ratio was 22.3 in December 2024 compared with 23.8 in December 2023.

“We hold onto our view that small caps and mid-caps are riskier and are overvalued compared to large caps. Maybe large caps are not cheap, but they are not overvalued,” said Naren.