GST reforms a mini-Budget; risks greater in mid, smallcaps: S Naren

Markets have been trading in a range for the past few months. Q&A Sankaran Naren, executive director and chief investment officer at ICICI Prudential AMC, tells Puneet Wadhwa in a telephonic interview that the biggest risk to the markets is elevated valuations and the large amounts of fundraising at not-so-cheap levels by different types of investors. Edited excerpts:

- Sankaran Naren, executive director and chief investment officer at ICICI Prudential AMC, tells Puneet Wadhwa

Would you say the recent GST reforms were a mini budget by the government? Has it exhausted its ammunition?

It was indeed a mini budget; one that was very positive, timely and much required for the economy. A consumption stimulus was needed, especially since many consumer-related sectors had slowed down. That said, the Indian macro economy remains in a good shape with GDP (gross domestic product) at 7.8 per cent, fiscal deficit at 4.4 per cent, current account deficit the lowest in 20 years at 0.6 per cent of GDP and inflation at its lowest since 2011, giving policymakers room for measures to boost growth. A step like GST 2.0 was both necessary and beneficial to give demand the much-needed boost.

Has greed taken over mindsets rather than investments based on market and economic fundamentals?