Over the last 2-3 years, Fixed Deposits or Debt investments have formed the major part of the asset allocation for all categories of clients. HNIs have been investing in tax effective FMPs & retail investor have been allocating a lot of investment in Fixed Deposits. Off course it made sense to invest in debt which was offering us risk free 9% till the beginning of 2012.
With the dawn of 2012, things changed rapidly. Suddenly things in equity market started looking cheaper. If you read our Investor report of January 2012, we had mentioned how 5100 was a crucial level to be broken then & how Nifty broke that decisively in the middle January 2012.We swiftly moved to a level of 5700 in Nifty and equally quickly gave back 1000 points by May 2012.
This swift up & down moves made investors nervous and many were unwilling to believe in impending rally. From a level of 4700-4800 we have already moved up 25% which is a very attractive return in any asset class.
Now the question is why should we stop investing in FDs and allocate money to equity. FDs return have become a tad lower but its very clear that the trajectory is downwards for the coming 2-3 years. If we compare the levels of Nifty of 2007 & 2012 (December) we would realize that Nifty hasnt moved an inch in the last 5 years. But in the last 5 years companies have continued to grow
Agreed the growth rates have not been very high, nor was Government's intention to get the GDP rolling till September 2012. But with the slew of recent reforms & impending Central elections in 2014 we have to believe that the Government will take all necessary steps to win back people's vote. We also need to believe in Indian companies which have grown at an average rate of 15% during the last 5 years.
Going by the P/E which is at low levels, there is an 80% chance of we making a return of 50%+ in the next 2 years and more than 65% in the next 3 years. FDs,going by the current rate, will take atleast 5 years to give us that kind of return. Now dont you think investing in FD & missing out on a super bull run is risky for your asset????
Caution: Investment with a stoploss of 5550 is suggested .... All the dips till then should be used to buy equity ...
With the dawn of 2012, things changed rapidly. Suddenly things in equity market started looking cheaper. If you read our Investor report of January 2012, we had mentioned how 5100 was a crucial level to be broken then & how Nifty broke that decisively in the middle January 2012.We swiftly moved to a level of 5700 in Nifty and equally quickly gave back 1000 points by May 2012.
This swift up & down moves made investors nervous and many were unwilling to believe in impending rally. From a level of 4700-4800 we have already moved up 25% which is a very attractive return in any asset class.
Now the question is why should we stop investing in FDs and allocate money to equity. FDs return have become a tad lower but its very clear that the trajectory is downwards for the coming 2-3 years. If we compare the levels of Nifty of 2007 & 2012 (December) we would realize that Nifty hasnt moved an inch in the last 5 years. But in the last 5 years companies have continued to grow
Agreed the growth rates have not been very high, nor was Government's intention to get the GDP rolling till September 2012. But with the slew of recent reforms & impending Central elections in 2014 we have to believe that the Government will take all necessary steps to win back people's vote. We also need to believe in Indian companies which have grown at an average rate of 15% during the last 5 years.
Going by the P/E which is at low levels, there is an 80% chance of we making a return of 50%+ in the next 2 years and more than 65% in the next 3 years. FDs,going by the current rate, will take atleast 5 years to give us that kind of return. Now dont you think investing in FD & missing out on a super bull run is risky for your asset????
Caution: Investment with a stoploss of 5550 is suggested .... All the dips till then should be used to buy equity ...
