Moneycontrol
Last Updated : Mar 08, 2018 10:55 AM IST | Source: Moneycontrol.com

We are not in a bear market! Allocate 70% of assets to equities, 30% to debt: Radhika Gupta

Advice remains same for all women irrespective of what profession one is in. It is important to be financially independent and financially savvy.

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Investors should check their asset allocation and not go overboard on equities due to the exceptional returns in past years, Radhika Gupta, Chief Executive Officer of Edelweiss Asset Management Limited, said in an interview to Moneycontrol's Kshitij Anand.

Q) On the occasion of Women’s Day what is the kind of advise you would like to extend to housewives or even to women who are investing in equity markets via mutual funds?

A) Advice remains same for all women irrespective of what profession one is in. It is important to be financially independent and financially savvy. One should have control over financial decisions and spend time in acquiring skills on money managing.

Investments are not difficult or complicated in today’s digital age and there are enough resources to help one learn how to do the basics right. The second important thing is to do what is right for each individual.

Individual needs are different and not the same as friends, colleagues or families. One should tailor their investment needs and plans as per respective needs and never deviate from that.

Q) Six days of decline has brought down Nifty lower by 400 points. The index has corrected by around 1000 points from its record highs if 11,171. Do you think that bears have now complete control over D-Street?

A) 2017 was the least volatile year in the last decade, as depicted by the Volatility Index. This, coupled with premium valuations led to the market becoming more sensitive to any negative news.

What we are experiencing now is a phase of heightened volatility and not a bear market. Such markets present a good case for a “buy on dips” kind of strategy.

The Indian market has been trading at a premium for a long time and we will have to wait for the earning revival going forward. Looking at the last two-quarter earnings, we expect the momentum to continue in the coming quarters as well.

There are certain macro headwinds, however, the ongoing reform continues to aid market and makes a good case for long-term investments.

Q) What should be the right strategy for investors right now – sit on cash and wait for a dip or deploy cash incrementally throughout the year?

A) We would suggest investors to deploy cash carefully and take a balanced approach while doing it. Investors should check their asset allocation and not go overboard on equities due to its exceptional returns in past years.

Q) What is your advise to investors who want to put Rs10 Lakh into markets? He is in the age bracket of 35-40 years. He/she is looking at forming a portfolio with direct equities, MFs, a part of fixed income as well?

A) If the investor has long-term financial goals and no idea about how to invest in equities, equity mutual funds can be one of the best vehicles to achieve the goal.

Unless you are an expert or are willing to spend considerable effort in becoming one, it is not advisable to invest directly in equities — Equity Mutual Funds are the right choice. The investors can speak with their investor advisors to eliminate any hesitation or confusion.

Looking at the current scenario, the above investor could use a 70-30 portfolio allocation approach with around 70% corpus vested in different equity funds and around 30% deployed in Debt funds in case the market corrects.

Q) What should be the ideal strategy for investors in terms of sectors? Do you think PSU banks are a good buy at current levels? What are the sectors which you think are likely to show momentum in the year 2018?

A) An investor should ideally take the diversified approach as many sectors currently are overvalued. The PSU banking sector, for instance, is going thru trough. Recapitalisation and managing NPAs are the weakest link right now.

As a result, private sector banks will continue to grab share from their public sector counterparts. Going into 2018, the quality stocks under consumer discretionary sectors are expected to perform well.

Q) With Dollar gaining strength there is a higher possibility of rupee weakness. Which sectors are stocks likely to benefit the most? What is your target level for the currency?

A) Export-driven sectors, especially defensives such as IT, are expected to perform well when the Dollar is gaining strength. The IT sector can see a revival in the near term considering higher spending on digital and IT revamp by developed countries.

Given India’s strong reserves and robust FDI/FPI flows, the currency is expected to remain stable and trade in a narrow range.
First Published on Mar 8, 2018 10:55 am
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