INSUBCONTINENT EXCLUSIVE:
Samvat 2074, the Hindu accounting calendar that ends on Diwali, was a tough year for Indian stock investors
While the first few months of the year saw the market soar to unbelievable valuations, it witnessed a significant correction and came down
sharply over the past few months
At the dawn of a new Samvat year, 2075, analysts are not giving much weightage to equity for portfolio allocation
They are advising investors to go for a diversified portfolio with 40-50 per cent equity exposure
That’s the view of 20 CIOs and research heads from top broking houses, mutual funds, life insurers and private equity funds.
So, if you
have to invest Rs 1 lakh this Diwali, Rs 40,000-Rs 50,000 should go into equities, and the rest into gold and fixed income.
The stocks
correction during the year gone by was more acute in midcaps and smallcaps, mainly due to Sebi’s reclassification of mutual fund schemes
and GSM/ASM circular and a change in equity taxation
In addition, a liquidity crisis in the NBFC space exposed by the ILFS default caused quite a bit of turmoil.
While the BSE Sensex is still
up about 6 per cent since last Diwali, the BSE Midcap and Smallcap indices are down 9 per cent and 17 per cent, respectively
Gold, on the other hand, has risen 5 per cent, while silver is down 3 per cent
“Have a conservative approach to equities and the exposure for an average risk-averse investor should be in the 40 to 60 per cent range
(including direct and mutual fund investments),” says Vinod Nair, Head of Research, Geojit Financial Services
Rest of the money can be distributed across short-term debt and gold as per one’s age and risk-taking ability.
Prasanna Pathak, Fund
Manager at Taurus Mutual Fund, said after providing for contingencies, 60 per cent of the incremental savings should go into equities
(through a mix of diversified equity and balanced mutual funds) and 40 per cent to various fixed-income instruments
That should work well for an average risk-taking investor.
Interestingly, none recommended real estate as an investment
Some said keeping some liquid cash could help tap upcoming opportunities in the market
All money managers seem to be giving more weightage to debt for the coming year than last year
Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking, said 30-35 per cent of a portfolio should go into high
quality debt, which has no exposure to risky sectors like real estate and infrastructure.
As for equity, he says 50 per cent the total
equity exposure should be in largecaps, preferably non-lending businesses
Thunuguntla advises you to keep 10 per cent of your savings in liquid assets to be able to make the most out of the opportunities that the
stock market may throw up
Another 5 per cent can go into gold.
India’s macroeconomic indicators weakened quite a bit midway through the financial year amid rising
crude oil prices, weakening of the rupee against dollar, fear of more rate hikes by RBI and the US Fed and concerns over global trade
war.
The BSE Sensex traded just shy of the 35,000 mark on Monday, way below its peak of 38,989 hit on August 29.
Sahil Kapoor, Chief Market
Strategist at Edelweiss Investment Research, said the stock market has some medium-term troubles ahead, including the state assembly
elections over November-December and the general elections in April-May
“We expect Nifty to look up once the current downtrend ends and the market finds a bottom and touch 11,500 by next Diwali.”
