ETMarkets Survey: How to invest Rs 1 lakh in a Covid19-hit market

ETMarkets Survey: How to invest Rs 1 lakh in a Covid19-hit market


Volatility in equity market throws up opportunities to rejig portfolios and pick up quality stocks. But with a very uncertain outlook for the economy, should you still remain heavy on equities?

You should. In fact, depending on your risk appetite, you may still put over half of your wealth into equities. That’s the view of an overwhelming majority of brokerages that took part in an survey last week.

Analysts at eight top brokerages advised investors to put at least 50-60 per cent of wealth in equities, 20-30 per cent in fixed income and the rest in gold.

Three analysts — Naveen Kulkarni, Chief Investment Officer, Axis Securities, Deepak Jasani, Head of Retail Research, HDFC Securities and Vinod Nair, Head of Research, Geojit Financial Services – suggested a similar portfolio composition: 60 per cent in equities, 30 per cent in fixed income and 10 per cent in gold.

Yet, most analysts warned in the survey that the domestic stock market is going to remain shaky for the rest of the year amid rising joblessness and a slower economic revival to come back to the pre-Covid normal.

“There is fear that the stress in the financial sector may spread to the real sector sooner or later,” said Jasani.

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To invest Rs 1 lakh in the current market, Umesh Mehta, Head of Research at Samco Securities, suggests putting in Rs 60,000 in equities, and Rs 20,000 each in fixed income and gold.

Hemang Jani, Head Equity Strategist, Broking & Distribution, MOFSL, said investors should hold 5 per cent in cash for future uncertainties. His asset mix: 60 per cent in equities, 20 per cent in fixed income and 15 per cent in gold.

The price of the yellow metal has jumped nearly 37 per cent in last one year, while the BSE Sensex is down 12 per cent for the same period. There are hopes that the trend will remain positive for gold.

Analysts say geopolitical tensions and weak forecasts for the global economy will keep gold prices on an uptrend.

G Chokkalingam, Founder, Equinomics Research, said an investor with average risk profile can put at least 50 per cent (around 70 per cent for highly conservative investors) in fixed income after the 35 per cent rally in stocks from their March lows. The remaining amount can be put in gold and equities.

He said if domestic equities fall more than 10 per cent from current level, then investors can start increasing equity allocation gradually.

Siddharth Sedani, Vice President, Equity Advisory at Anand Rathi Shares and Stock Brokers, advised investors to put in 50 per cent in equities in a staggered manner.

“The market will remain uncertain till the time a cure for the pandemic is found. We believe the current reasonable valuations could be used as an opportunity to top up existing investments,” he said, adding that consumption, chemicals, IT and pharma stocks may lead the next rally when the economy starts reviving.

Source: ET Markets

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