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"It would look at many of the two wheelers. So, you look at it, it would look at many of the segments of market which have done very badly over the last four to five years and that is how we came to this area," says S Naren, ED & CIO, ICICI Prudential AMC.So, let us now focus on a very basic investment approach which you have adopted over the years, which is buy fears, sell greed; be contrarian; try and buy what others are selling when you find value there. In that same spirit, you bought telecom, you bought into metals, you bought into banks. I can see one pocket of fear in the market, which is IT. Nobody likes it. Everybody has a view that nothing could go right on it. Is it a time now for you to put your long-term lens and start buying into it, especially IT services?S Naren: See, we are looking at it. Unfortunately, it is connected to the US market and US market is not yet value. US market has done extremely well. So, if we see some decent setback in the US market, we will certainly look at IT, that is where we are struggling at this point of time. But the reason why we came to looking at quality was, quality was a theme which had not done well from 2020 to 2024, that four years was bad. So, we said okay let us look at quality instead of value because quality was something which had done badly and we thought that relatively that is an area which peaked in 2020 and we thought that we can try that and that is how we came to quality and quality would definitely include it, would definitely look at FMCG. It would look at many of the two wheelers. So, you look at it, it would look at many of the segments of market which have done very badly over the last four to five years and that is how we came to this area. But it would certainly be part of it. But we are confused at this point of time because the sector is trading at a premium to pre-covid valuation and the sector is growing at much slower than pre-covid. So, if we had seen the valuations being slightly lower than pre-covid, it would be a very-very interesting contrarian opportunity. Why have you come up with a NFO which is called as a quality NFO because quality stocks are trading at a premium.S Naren: No, quality stocks always trade at a premium. You cannot expect quality stocks to trade at a premium. Your junk stocks are the ones which have to trade at a discount. So, it would trade at a premium. But what happens is that when you have a 12-year bull market, after 12 years people say that you can invest in junk, you can invest in anything and make money. If you look at the market, you would see that how much money is there in FMCG fund, how much money is there in consumption fund. All these funds have very little money. Whereas if you look at the amount of money which is there in smallcap funds, it is much-much higher. So, I would say that we have actually a 12-years of a big bull market, means that people want to actually take a lot of risk in equity and they do not want to be in the safest parts of the market whether it is largecap or quality, that is why first we came up with a fund called Minimum Variance which was focused on the defensive parts of largecap and then we said that we should look at quality. So, it is exactly the anti-thesis of what people are doing at this point of time. Debt, macros are great and given where bond yields are right now, are they also pricing in a near-perfect scenario and there is very little room for the debt market now to rally from here?S Naren: See it is a big problem because in India you look at it unlike US for example. In India, we are at the lowest interest rates in years on 10-year, whereas in US we are at possibly one of the highest interest rates in years on a 10-year basis. 10-year G-Sec is at except China and India, across the world you are at the highest yields in 10-year. So, it is very tough at this point of time for us to tell people that Indian debt is a great asset class, that is the challenge today. Neither is Indian debt a great asset class. Gold is even worse. So, one of the ways in which we judge how much an asset class is let us say moment too much in focus is the number of questions we are asked. Actually, the asset class which is most in vogue right now is gold. If you go for any meeting, the number of questions we get on gold is unbelievable at this point of time. So, gold is at all-time high. 10-year yields are at almost at all-time low, except in crisis periods it has never been at these yields. So, it has been a very-very tough period on where to put money at this point of time and that is why we tell people put money everywhere because there is no pocket where you can say that it is cheap, so you can put money there. Even two years back, for example, gold and silver were very-very interesting, so we actually thought it was very-very interesting, now even that does not look at this point of time, in fact it looks to be the darling asset class of Chinese investors and many of the global central banks of the world. So, it is a very-very tough time. So, I think it is a time where you allocate money across asset classes and not choose one asset class and at the same time today focus within every asset class on the safer parts of the asset class because of the way the markets are at this point of time. Does it mean that the markets are going to fall? No, because I think India is one of the best structural stories and where the macro has been handled brilliantly over the last decade. So, India does not look to be the market which is at risk at this point of time, but at the same time it is not a market which is value at this point in time.

Moody's downgraded the U.S. sovereign credit rating on Friday due to concerns about the nation's growing, $36 trillion debt pile, in a move that could complicate President Donald Trump's efforts to cut taxes and send ripples through global markets.Moody's first gave the United States its pristine "Aaa" rating in 1919 and is the last of the three major credit agencies to downgrade it.Friday's cut by one notch to "Aa1" follows a change in 2023 in the agency's outlook on the sovereign due to wider fiscal deficits and higher interest payments."Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said on Friday, as it changed its outlook on the U.S. to "stable" from "negative."The announcement drew criticism from people close to Trump.Stephen Moore, former senior economic advisor to Trump and an economist at Heritage Foundation, called the move "outrageous". "If a US backed government bond isn't triple A-asset then what is?" he told Reuters.White House communications director Steven Cheung reacted to the downgrade via a social media post, singling out Moody's economist, Mark Zandi, for criticism. He called Zandi a political opponent of Trump.Zandi declined to comment. Zandi is the chief economist at Moody's Analytics, which is a separate entity from the credit ratings agency Moody's.Since his return to the White House on January 20, Trump has said he would balance the budget while his Treasury Secretary, Scott Bessent, has repeatedly said the current administration aims to lower U.S. government funding costs.But the administration's attempts to raise revenue and cut spending have so far failed to persuade investors.Trump's attempts to cut spending through Elon Musk's Department of Government Efficiency have fallen far short of its initial goals. And attempts to raise revenue through tariffs have sparked concerns about a trade war and global slowdown, roiling markets.Left unchecked, such worries could trigger a bond market rout and hinder the administration's ability to pursue its agenda.The downgrade, which came after market close, sent yields on Treasury bonds higher, and analysts said it could give investors a pause when markets re-open for regular trading on Monday."It basically adds to the evidence that the United States has too much debt," said Darrell Duffie, a Stanford finance professor who was formerly on Moody's board. "Congress is just going to have to discipline itself, either get more revenues or spend less."FOCUS ON DEFICITSTrump is pushing lawmakers in the Republican-controlled Congress to pass a bill extending the 2017 tax cuts that were his signature first-term legislative achievement, a move that nonpartisan analysts say will add trillions to the federal government's debt.The downgrade came as the tax bill failed to clear a key procedural hurdle on Friday, as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress.Moody's said the fiscal proposals under considerations were unlikely to lead to a sustained, multi-year reduction in deficits, and it estimated the federal debt burden would rise to about 134% of GDP by 2035, compared with 98% in 2024."Moody's downgrade of the United States' credit rating should be a wake-up call to Trump and Congressional Republicans to end their reckless pursuit of their deficit-busting tax giveaway," Senate Democratic Leader Chuck Schumer said in a statement on Friday. "Sadly, I am not holding my breath."The cut follows a downgrade by rival Fitch, which in August 2023 also cut the U.S. sovereign rating by one notch, citing expected fiscal deterioration and repeated down-to-the-wire debt ceiling negotiations that threaten the government's ability to pay its bills.Fitch was the second major rating agency to strip the United States of its top triple-A rating, after Standard & Poor's did so after the 2011 debt ceiling crisis."They have got to come up with a credible budget agreement that puts the deficit on a downward trajectory," said Brian Bethune, an economics professor at Boston College, referring to Republican lawmakers.MARKET FRAGILITYInvestors use credit ratings to assess the risk profile of companies and governments when they raise financing in debt capital markets. Generally, the lower a borrower's rating, the higher its financing costs."The downgrade of the US credit rating by Moody's is a continuation of a long trend of fiscal irresponsibility that will eventually lead to higher borrowing costs for the public and private sector in the United States," said Spencer Hakimian, chief executive at Tolou Capital Management, a hedge fund.Long-dated Treasury yields - which rise when bond prices decline - could go higher on the back of the downgrade, said Hakimian, barring news on the economic front that could increase safe-haven demand for Treasuries.The downgrade follows heightened uncertainty in U.S. financial markets as Trump's decision to impose tariffs on key trade partners has over the past few weeks sparked investor fears of higher price pressures and a sharp economic slowdown."This news comes at a time when the markets are very vulnerable and so we are likely to see a reaction," said Jay Hatfield, CEO at Infrastructure Capital Advisors.