Ajay Tyagi, President and Head of Equity at UTI Asset Management Company, said Indian equities currently trade at rich valuations.
This assessment comes as investors navigate a volatile market environment where high prices may limit short-term growth. Tyagi's insights into the firm's "investment playbook" provide a framework for how one of India's largest asset managers selects sectors and constructs portfolios.
Speaking on CNBC TV18, Tyagi said that rich valuations remain the single biggest factor likely to keep markets range-bound in the near term. He said that the market requires a correction of 10% to 15% [2] to establish a more sustainable foundation for growth. According to Tyagi, the mid and small-cap segments would specifically benefit from such a move by creating a healthier valuation base [2].
Tyagi also addressed the impact of government fiscal announcements on market volatility. He said the budget is not a big market-moving event because it is simply a statement of the government's income and expenditure for the next 12 months [2].
Beyond immediate market movements, Tyagi discussed the broader investment philosophy at UTI AMC. The firm focuses on a disciplined sector-selection framework, and specific fund-picking strategies to manage risk. This approach is part of a long-term strategy that has seen the company reach milestones such as celebrating 10 years [1] of its flagship fund.
Tyagi's strategy emphasizes a balance between opportunistic buying and fundamental value. By identifying sectors with strong growth prospects while avoiding overvalued stocks, the firm aims to protect capital during periods of stagnation. He said that the current environment requires a more selective approach to stock picking to avoid the risks associated with inflated prices.
“Indian equities continue to trade at rich valuations”
Tyagi's call for a correction suggests that institutional investors may become more cautious or increase cash holdings to prepare for a dip. By signaling that mid and small-cap stocks are currently overpriced, UTI AMC is cautioning against aggressive entry into these segments until a price reset occurs, shifting the focus from momentum trading to fundamental value.
