The chosen ones
2011 IS GOING TO BE A LANDMARK YEAR FOR INVESTORS
Twenty-three-year-old Ashish Vora is a firm believer in the India growth story, but is a bit of a Hamlet when it comes to betting on the bourses. The Mumbaikar would rather prefer a wait-and-watch policy than take the plunge, even though the Sensex is shooting northwards. “Usually the markets have shown drastic corrections after such rallies,” is his reasoning. You cannot blame him, especially since the market reactions to extraneous factors have become so unpredictable these days.
But fund managers refuse go by Vora’s wisdom. The markets are soaring and they think the trend will last for a year at least. Says Amar Pandit of My Financial advisers: “In 2005, when the index crossed 7,500, people thought they would invest when it comes down. Did that happen? No.” It seems everyone wants a piece of the Indian pie these days. Foreign institutional inflow is boosting the market, even if the industrial output figures have not been up to the mark.“I think there will be a 30 per cent appreciation over the next year, most of it is due to liquidity in the market. The fundamentals of a company do not make a difference,” says Suresh Sadagopan, principal financial planner, Ladder 7 financial advisers.
However, once the flood of money eases, there might be some correction. The US is slowly coming back to its feet and there is fear that capital inflow might move in that direction. “Last year, India had a natural advantage, the sentiment in the US was bad and the Euro crisis had the world economy in the doldrums,” says Pradip P. Shah, chairman, Ind-Asia fund advisers. Ad-the general feeling improves, India might see more competition. The country will do well if it makes the environment conducive for foreign fund inflow.
So, what should an investor do? The unanimous verdict is, invest in equities. If there was a time to invest in the stock market, it is now. Here is a piece of advice: do research, find those undervalued stocks and grow your money with them.
So, what should an investor do? The unanimous verdict is, invest in equities. If there was a time to invest in the stock market, it is now. Here is a piece of advice: do research, find those undervalued stocks and grow your money with them.
Pharma, financial services and automotive sectors seem to be the favorites. Real estate has fallen off the list for 2011. Although mutual funds have had a bumpy ride for most part of 2010, fund managers still think they are a wise bet. “Mutual Funds have squarely beaten the Sensex. The returns from equity diversified funds have been 23 per cent compared to 18 per cent from the Sensex,” says Sadagopan. Mid-cap funds would also be a good bet.
From the depths the Sensex reached two years ago, investor sentiment has now turned around. The investors are now a more confident lot. While positive interventions from the government have helped, big IPOs like that of Coal India have further increased their confidence. Our panel of experts has handpicked a few stocks, mutual funds and other investing instruments they feel will do well over the next one year and beyond. Happy investing!
