New Samvat brings opportunities in mutual funds, equities and gold: Experts

Experts from different segments shared their views at Business Standard Hindi's special webinar, 'New Samvat, New Beginning: An Opportunity for Investors to Reset Their Portfolios'

Despite global uncertainty, geopolitical tensions and market volatility, India’s growth story remains strong. As the new Samvat begins with Diwali, investors are likely to find opportunities across mutual funds, equities and gold, experts said.

 

Investors should maintain a balance between equities, gold and debt, while keeping an eye on improving earnings at large companies and global developments. Opportunities in small-cap stocks and the defence sector should be assessed carefully, while systematic investment plans (SIPs) should continue even during market declines. Investors should also understand the risks before committing money to newer investment avenues such as specialised investment funds (SIFs), they said at Business Standard Hindi’s special webinar, ‘New Samvat, New Beginning: An Opportunity for Investors to Reset Their Portfolios’.

 

 

The webinar, held across three sessions, focused on investment opportunities and prospects in mutual funds, equities and gold. Experts said India’s long-term growth outlook remained strong, with opportunities likely to emerge in sectors such as power, artificial intelligence, manufacturing, renewable energy, financial services and consumption.

 

SIPs have changed investor behaviour

 

The first session focused on mutual funds. Venkat N Chalasani, chief executive officer of the Association of Mutual Funds in India (Amfi), said SIPs had played an important role in changing investor behaviour by encouraging regular and disciplined investing. When markets fall, investors can accumulate more units at lower prices, he said.

 

Chalasani said around 65 per cent of India’s population was below 35 years of age, which could support consumption growth. Despite multiple challenges, the country’s economic growth rate had remained around 7.2-7.3 per cent, he said, adding that investors should retain confidence in India’s long-term growth story.

 

Rahul Singh, chief investment officer-equities at Tata Mutual Fund, said there were signs of an improvement in earnings at large-cap companies. Profit growth at such companies had remained weak for some time but was now expected to accelerate, which could be positive for the market.

 

Jitendra Sriram, senior fund manager-equities at Baroda BNP Paribas Mutual Fund, said sustained participation by domestic investors had helped maintain liquidity in the market and partly cushioned the impact of selling by foreign investors. Earnings at small-cap companies had also recovered well over the past few years, he said.

 

Large-cap stocks could lead gains

 

The second session focused on the stock market.

 

Harendra Kumar, managing director at Elara Securities, said the market outlook for the next three years appeared positive. Over the long term, large-cap stocks could potentially deliver annual returns of around 12 per cent, he said.

 

Kumar said that if foreign investors returned to the market, large private banks and stocks in the automobile, consumer discretionary, internet and energy sectors could benefit. He suggested that large-cap and mid-cap stocks together could account for around 75-80 per cent of an equity portfolio.

 

Jignesh Desai, chief executive officer-institutional equities at Centrum Broking, said large-cap stocks appeared attractive on valuations. The Nifty’s average valuation over the past 10 years had been around 20 times earnings, compared with about 18 times currently, he said. This, according to Desai, was creating opportunities for long-term investors in quality large-cap stocks.

 

New Samvat may offer a buying opportunity in gold

 

The third session focused on gold.

 

Apoorva Sheth of Samco Securities said $4,000 an ounce was a strong support level for gold in the international market. He estimated that gold could rise to $4,600 an ounce over the medium term, while the next three to five years could see further substantial gains.

 

The recent decline in gold prices offered a buying opportunity for new investors, Sheth said. However, investors who already had adequate exposure to gold could find equities relatively more attractive at present.

 

He suggested that gold could account for 15-20 per cent of a portfolio. Investors without any exposure to gold could use the current correction to start buying, while those already adequately allocated to the metal could look for better opportunities in equities.

 

Sheth also cautioned investors to account for the higher volatility and risk involved when investing in silver.