Equity investments in large caps might deliver reasonable returns with a 3-5 years horizon, according to Nimesh Sha, MD and CEO, ICICI Prudential Asset Management Company Ltd.

Many reasonably priced

Markets are now neither cheap nor expensive at the moment. “Out of top 100 large caps, about 20 are expensive but others are now cheaper and the market is reasonable,” Shah said in an interaction with newspersons here on Friday.

Shah sees the present macro economic conditions as ‘encouraging’ with a projected current account deficit at about 1 per cent and an expected fall in the interest rates by 100-150 bps in the next one year.

Mid-caps expensive

“Further, the corporate profitability at all time low. This might go up with increased capacity utilisations over next three years resulting in higher returns on equity,” he said. The corporate profitability is expected to be ‘good’ by 20017-18, going by the current parameters. The mid-caps, on the other hand, are expensive at present and in some cases the price to earnings ratios are higher than the large-caps.

In an expected low interest rate regime, even the debt funds are safer. “We are optimistic about debt funds, both in the short and long end of the curve,” Shah said.

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