Investing: Paras Adenwala

I hold 100 shares of Idea Cellular. Recently, Goldman Sachs lowered its estimates for the company. Should I be concerned about my investment? Should I book profits?
The telecommunication sector is undergoing transformation. The potential for the sector continues to be promising, with the rural market expected to push growth rates. With some favourable policy-push, the prospects for the sector could improve further. Hence, if your investment horizon is long term, you could continue to hold onto your investment.

What are your views on small- and mid-cap stocks? In the current market, are they good investment bets?
High quality, fundamentally sound small- and mid-cap stocks, if invested in for the longer term, should deliver returns that are better than their large cap peers. However, stock selection is critical. They can certainly be invested into, although gradually, to benefit from weak market conditions, with an investment horizon of at least 18 months. It would be advisable to use the services of a professional, to invest in such high-risk, high-return segment.

Which sectors are contrarian bets right now and why?
Most interest rate-sensitive stocks seem excellent bets, at current levels. With a weakening global business scenario and relentless inflation in India, these could come under pressure. This would enable the central bank to have status quo on interest rates before it starts lowering these. Businesses like automobiles, infrastructure, real estate, banking and financial services would benefit from it.

I want to invest in equities through mutual funds (MFs) and stocks. Which ones should I consider?
If you are an amateur investor, it would be advisable to take exposure to equities through the MF route. You could invest in a diversified-fund that has a strong, consistent performance of at least five years, assets under management of Rs 100 crore and credible sponsors. A fund from any of the top 10 fund houses could be identified.

As far as direct investments in stocks are concerned, take the help of a professional. In case you choose to do it yourself, you could pick strong stocks from interest rate-sensitive sectors.

I am advised to buy gold exchange-traded fund (ETF) this festive season. Is it advisable to hold gold in demat form?
Yes, an ETF is an efficient, convenient and transparent way to invest in gold. ETF prices move almost in line with gold prices.

The writer is managing director and principal portfolio manager, Capital Portfolio Advisors. The views expressed are his own. Send your queries to yourmoney@bsmail.in