Where To Invest In 1998
In the last issue of the year, The Smart Investor presents the markets, as viewed by the experts. The panel selected cuts across most asset classes: equities, debt, mutual funds, real estate and gold. Besides, we also look at the best and the worst stocks of 1997 on the secondary market and some of the new listings on the BSE.
Since the equity markets recovered in December, the year closes with the Sensex gaining 16.94 per cent. The Natex gained 14.7 per cent and the BSE-200 was up 14.21 per cent. R Balakrishnan, president, Dil Vikas Finance, suggests that retail investors should prefer debt and look at bond funds of the growth type in absence of debt issues because of the fluid political situation. In equities, he recommends defensive stocks and the oil sector.
Devesh Kumar, head of research, Hoare Govett (India) Securities, believes that 1998 will be a year of further reforms and expects economic recovery in the second half of 1998-99. He also prefers defensive stocks and his favourites are the FMCGs and the oil sector. He is not upbeat about cement, banking and automobiles.
The debt market has been interesting in 1997, which could well end up being remembered more for the CRB Caps fiasco. Interest rates fell, as, the IDBI and ICICI bond issues in the first quarter of 1997 were at a coupon rate of 15.5 per cent and the recent ICICI issue was at a coupon rate of 12.75 per cent. Aashish Pitale, manager-fixed income, ICICI Securities, gives an overview of the government securities market and since interest rates for other instruments have a premium over the risk-free government paper, the investor can decide. He also expects that the spread between the PSU bonds and corporate debentures will narrow further.
Mutual funds are undergoing changes; some have rebalanced their portfolio in 1997 and some close-ended funds have become open-ended and this trend will continue. Dhirendra Kumar, CEO, Value Research, finds that the balanced funds have given the best returns in 1997 and also recommends some of his favourites.
Real estate is going through a piquant situation