There was a big drop in the stock markets. The Sensex fell 1.8% last week. Nifty was also down 1.6%. Markets fell on the first day of this week, which is Monday as well. The main indexes slipped more than 2.5%. The rupee is also at its lowest against the dollar.
So far this year, the Sensex and Nifty have fallen more than 10%. In such a situation, investors do not understand what to do now. Especially those investors are confused, who want to invest around Rs 10 lakh right now. To clear up the confusion for these investors, we spoke to Nilesh Shah, MD, Kotak AMC.
Shah says there is a lot of uncertainty in the market right now. It is difficult to say how the market will behave in the future. Crude oil prices can go up or down. The US Federal Reserve, the central bank, could raise interest rates more than expected. It is also difficult to say anything about Russia and Ukraine. One thing is certain, the one-sided rally we saw in the market from March 2020 to October 2020 will not be seen in the next few days.
The best strategy is to maintain asset allocation in the current environment, he added. At this time, you should avoid investing by taking out loans. You should avoid investing too much in stocks. In stocks, you can keep a little more money in large caps. You can keep the rest of the money in midcaps and smallcaps. You can use the market decline to increase your allocation. Yes, you shouldn’t do it all at once. You should adopt a strategy of buying a little on each correction.
Second, this is not a market where you should focus on expensive stocks. Now the value of money has increased. That’s why you should think about investing only in stocks of companies whose prices are at the right level. Also, you need to maintain your focus on long-term investments. We saw how much the market fell after the start of the corona epidemic. But that period is over. So you need to be prepared for some short-term ups and downs. But also keep an eye out for long-term investment opportunities.
Kotak AMC MD said if you want to invest in debt, there are many options. If you can take more risk for higher returns, then you can look at the REIT/INVIT type of structure. Some of them are listed. Some are coming this year. REITs/INVITs are not fixed income instruments, but they offer you better returns with little volatility. Instead of making a concentrated portfolio, you should build a portfolio in which you should build a diversified portfolio with REIT/INVIT.
He said that one can invest in funds with a maturity of one year to five years. PSU bond funds, corporate debt funds, and short-term bond funds are good options. RBI’s action on these funds has already had an impact. Bad news has little effect on them. Those who are disappointed by the low yields of bank term deposits, especially seniors, can turn to hybrid funds other than REIT/INVIT. There are many types of hybrid funds on the market.
How much gold should be in the wallet? In response, Shaw said gold’s share of the portfolio could be 5-10%.
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