Even as the bloodbath played out on the Street late last year, there were two events that investors, the Street, companies and the global business community - in fact, just about everyone who's been tracking the big India story - was waiting for. The formation of the new government and subsequently the Budget.
And while the election results did not disappoint - and fired up the Sensex by about 50%, the impact of the big defining event - the Budget - has been exactly the opposite. Not only did the Sensex fall by 9.5% in only five days, the smooth upward movement witnessed post the June 16 election results, saw a complete reversal. The signals obviously are mixed and confusing and investors are not sure about the way forward with their portfolios. Reason why we at SundayET decided to try and decode the signs for you with our signature event - The SundayET CEO Roundtable on Personal Finance. We have always tried to keep our reader - the investor - on the cutting edge of financial planning. And this time it was no different.
Our experts, drawn from banking, insurance, asset management, securities and tax planning, included S K Goel, chairman & MD, UCO Bank, Krishnamurthy Vijayan, executive chairman, JP Morgan Asset Management India, D K Aggarwal, MD, SMC Wealth and Rajesh Sud, CEO & MD, Max New York Life Insurance. Moderating the discussion was Amitabh Singh, tax partner, Ernst & Young India.
The main takeaway was simple, how should you - the investor - adapt your portfolio according to the market sentiment. What unfolded through the discussions were guidelines on wealth creation, wealth management and now, even more important, wealth resurrection. The question was how to preserve what you already have and keep it moving till the market comes back.The gurus put their heads together in trying to map out the road ahead. And here's their verdict - you, the investor, are good to go. Retail investors, who want to bet their bucks on the Indian equity market post-Budget, should no longer wait for that big-ticket event, instead it's time to enter the market, but for the long haul. And here's what they all agreed on - the right asset allocation is critical for a successful investor who maximises profits and stays on top during any market tumble. Exactly timing the market is tough even for the savviest of investors. So it's next best to go contrary and buy now when others are still shying away from the equity market.
Some of the points that came up during the discussion included the issue of rebalancing portfolios, the sectors to stay tuned into, better tax planning and the insurance vs mutual fund debate. Here all panellists advised retail investors to approach professionals as the equity market still remained tough to crack. We have not missed the bus yet. There are many stocks which are still cheap. If the market goes down from here on, buy more,” Mr Aggarwal from SMC Wealth added.And even for risk-averse investors who like to stay away from volatile equity markets, there were a few takeaways.Mr Goel of UCO Bank predicted at least a 200-basis point fall of the fixed deposit rates in the near future, which means that those who still go for fixed deposits in banks could look forward to higher returns than those who postpone their investment decisions.Mr Sud of Max New York Life felt that conservatism was still useful and while leveraging was a great strategy, but over-leveraging was not.On the tax front, Mr Singh of E&Y, felt that those in service needed to be more savvy to get more bang out of their bucks.For JP Morgan’s Mr Vijayan, there are positives on both the domestic consumption and the infrastructure growth fronts. “I feel there’s no need for mutual fund investors to dramatically change their asset allocation. With the hope that government expenditure will trigger growth, the equity strategy of investors is likely to go in the same direction,” he said.
Overall, pin-stripe suits and optimism blended well together and that’s surely music to the ears of Indian investors.
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