Taking stock: Even as markets touch new high, bet on equities for superior returns

Jun 09 2014, 07:05 IST
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In a dramatic rebound, the average return of infrastructure schemes over the last three months jumped by 50 per cent thereby lifted the three-year compounded annual growth of the group of infra schemes to a reasonable 8.9 per cent. In a dramatic rebound, the average return of infrastructure schemes over the last three months jumped by 50 per cent thereby lifted the three-year compounded annual growth of the group of infra schemes to a reasonable 8.9 per cent.
SummaryIf entire MF industry found it hard to come out with explanation on performance of their funds

but that may not continue for long and there may be differentiation in stocks that continue the run and those that are left behind. “If the economic recovery sustains, the momentum will continue but not all companies in a particular segment will do well and become a multi bagger. As of now people are positioning themselves in the market but after some time they will start differentiating between companies that are strong and have a higher potential to do well,” said Upadhyaya.

Experts advise that investors must look to have some exposure to mid and small cap companies through mutual fund schemes that invest in them. Infrastructure and banking sectors are also expected to be strong themes.

Are retail investors in

It is a fact that net inflow in equity schemes for the month of May is the highest since that registered in April 2011, but that does not mean that retail equity investors are back in the market. While a lot of them are still wondering if they have missed the bus and are committing the mistake of waiting for a correction to enter the market, there are others who are still not convinced of putting their hard earned money into equities—in a sense not yet convinced of the India’s long term growth story. While it may be worthy for them to refer to the example of how equities outperformed fixed returns even in the volatile period of last six years, they must also know that the Sensex has grown at a CAGR of 17.8 per cent over the last 10 years and therefore it is a good option for their savings meant for the long term.

Industry insiders say that the money flowing into the equity market is from investors who understand them and are already invested.

Retail investors must understand that markets at all time high does not mean it will not have a new high in future and one can only refer to the near past to take a lesson. While the Sensex crossed 22,000 almost 10 weeks ago in May to hit a new high then, it has since moved up by 15 per cent to close at 25,396 on Friday. Therefore, rather than waiting for a correction, get sensible and start your asset allocation.

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