Concerns over a possible Greek exit from the euro-zone and a lacklustre Indian economy have given Indian markets a double whammy. The Finance Minister’s announcement that austerity measures are needed has only added to the anxiety. In these tough times, what should you tell your investors? Read on to find out what top industry officials are saying.
Rajiv Anand, MD & CEO of Axis Mutual Fund, recommends that investors should invest through equity diversified funds and increase allocation to SIPs.
If you don’t think that India is going to grow at 7%, then you should buy fixed income. If you think that India is poised for a 7% growth then there is huge amount of value in stocks currently. If you want to build a high quality portfolio for the long term, then I think the market is providing you that opportunity now. If investors stay invested in diversified equity funds then they can’t go wrong.
Every year there is a different event. Events come and go. Today we are talking about Greece and in a year we’ll talk about some other event. Yes, there is no denying that there are issues in Europe but investors are probably not seeing that commodity prices have come down globally and are expected to fall even further. This is positive for India. Over a period of time that will percolate into the Indian economy.
We have heard distributors complaining that SIPs have not performed when there was a secular market upturn from 2003 to 2008. Now when the markets are falling people are complaining that they are not getting any returns. SIP is about disciplined investing and you need to eliminate emotions from investments. I would urge that investors should increase allocation in SIPs. Have faith and patience and you’ll be rewarded.
Ravi Gopalakrishnan, Executive Director, CIO–Equity, Pramerica Mutual Fund, suggests staying with large caps.
Volatility will continue for some more time. Apart from the global uncertainty we have our own problems as well. So it’s a double whammy. The European situation needs to stabilise, at least momentarily. Strong actions particularly on the reforms side are needed.
SIPs should always continue. Equity will remain to be the best asset class over the medium to long term. Markets only allow opportunities during these uncertain times. I would advise investors to look at diversified large cap funds because any recovery in the market will reflect in large cap stocks first. If there is any further uncertainty large caps are better placed to tackle volatility.
Debashish Mallick, MD & CEO of IDBI Mutual Fund, says that investors can look at index funds if they face difficulty choosing stocks.
Investors with risk appetite can invest in equities now through diversified funds. I would suggest steering clear from sector or thematic funds. SIPs should continue. Lump sum investment can also be done over next three months or more. At this juncture index funds also look good because the broader market has gone down. If you are unable to choose which stock to invest in, index funds are ideal.
