Should investors rejig portfolio in a rising interest rate regime?

With the surge in global commodity prices, global central banks, including the RBI, have turned hawkish to tame inflation. Thus, analysts expect volatility to be the new normal for equity markets.

Frontline indices – Nifty 50 and S&P BSE Sensex – have tanked 4% each so far this year amid a triple whammy of rising interest rates, inflation, and geo-political tensions.
With the RBI joining hands with global majors in pivoting policy towards inflation control, analysts expect the central bank to aggressively increase rates in 2022 to drain liquidity out of the system.

Hence, the question revolves around how investors should design their portfolio in a rising interest regime?
According to AK Prabhakar of IDBI Capital, banks and life insurance companies could be the safer bet amid the rate hike regime.

On the flipside, analysts expect rising interest rates to dampen capital-intensive companies with heavy debt on books.

Overall, investors may look to add financials and IT to their portfolio, while debt-heavy capital goods stocks may be avoided in these times.
 
Meanwhile, Friday’s trading session will largely focus on stock-specific action amid Q4 results season, and global trends.
Index heavyweight Reliance Industries is set to announce its March report card today amid expectations of a somber sequential earnings’ growth.
 
Analysts expect the Mukesh Ambani-led conglomerate to report consolidated net sales and EBITDA growth of up to 52% and 35% year-on-year, and up to 22% and 6% quarter-on-quarter.

Furthermore, the net profit growth is pegged in the range of 18 to 28% YoY, but down up to 16% QoQ.

Among key monitorables, analysts will eye management’s commentary on benefits from higher fuel margins and crude sourcing strategy, comments on the impact of higher petrochem prices on domestic demand, and signs of reversal in telecom subscriber churn.
 
In the primary market, investor participation in the mega LIC IPO on its third day will be on the radar after the issue sailed through on Day 2.