market There is tension amid the ongoing conflict in West Asia. As a result of these, equity markets have seen rapid fluctuations. What is correct? investment Strategy in current scenario? Nilesh Shah, Managing Director Kotak Mahindra The asset management company advised investors to focus on domestic sectors in an interview with Sandeep Singh of Indian Express.
Advise investors to remain ‘neutral’ on equities amid geopolitical uncertainty
Shah said that there is no possibility of tension reducing middle eastInvestors can consider domestic sectors like bankingFinancial services and consumer durables, because they are not directly correlated Oil Prices.
He said that investors should remain neutral in such times. equitiesKeeping in mind that the allocation should be in line with their risk profile and investment objectives. He said ‘equal weight’ investors can continue to hold their stake. SIP But one should avoid investing money in lump sum.
According to him, “This is the time to remain neutral with equities, not overweight.”
Equity Allocation Playbook for Investors
Shah suggests that ‘underweight’ investors on equities may want to invest in a calibrated manner. “Until there is clarity on the geopolitical front, the market is likely to remain volatile,” the industry expert said.
With the market down 10%, Shah says investors should follow the “dharma of asset allocation”.
Inside equityHe advises investors to be a little ‘overweight’ Big And midcap Because they will be less volatile. He also advised investors to add domestic-focused sectors that are not directly affected by higher oil prices, such as banking and financial services and consumer durables.
Outside equities, it is believed that investors can focus on loan. Loan interest rates are likely to increase due to high fiscal deficit. So, in that scenario, he advises, “One can invest at the short end of the debt yield curve arbitration fundShort-term bond funds, money market funds so you don’t take duration risk in a rising interest rate environment.
Safe haven metals may regain their shine
while prices Sleep And silver Currently, the market is in a downward trend, Shah says that due to the demand for safe investments, investors may want to invest in these assets. He said that the recent fall in gold and silver is due to increase in interest rates.
He said US interest rates will eventually decline, which will provide a cushion for these precious metals.
“But one must remember that the precious metal has no intrinsic value but emotional value, so one should invest, but only a certain percentage of one’s portfolio,” Shah told IE in an interview.
Why is this decline in the market different from the Covid period?
Shah said the recent fall in the markets is different from the fall during COVID-19 because it is driven by human spirit and emotion.
He cited the example of Iraq’s invasion of Kuwait and the Iraq War, saying that these past geopolitical tensions also caused oil prices to rise. “In most of the cases in the past, it can be seen that the market bottomed out even before the war stopped,” Shah said.
The renowned market guru pointed out that the market finds a way to correct itself, as has been observed for a long time Russia-Ukraine war. “…economy Finds a way, and the market corrects itself and then finds an equilibrium where it can start going up.”
panic selling vs staying invested
The market expert said that during the Covid crisis, those who panicked suffered estimated losses, while those who remained invested made profits. “There will be volatility, there will be pain. The market fears the impact of higher oil prices on the rupee, interest rates, inflation, GDP growth, jobs, employment and remittances from the Middle East,” Shah said.
conclusion
Nilesh Shah advised investors to adopt a balanced approach and said that the market does not like uncertainty. He advised investors to maintain their investments.