Rather than losing sleep over lost opportunities, it's time to get your portfolio right in the new year. Our wide range of industry experts advise you on how to re-align your approach to maximise gain and minimise pain
RECENTLY, a friend sent me a text message on his take on the Indian stock market in 2009. It read: "There are two knocks on the door. Insider asks: Who is there? Outsider: It's me, 'opportunity'. Insider: Opportunity never knocks twice...' Here he referred to retail investors as 'insider' and equity markets as 'outsider'. He was among many investors this year who missed the bus on Dalal Street and is wondering whether the slight openings the Indian stock market is offering every 'now and then' are indeed opportunities.
His emotions outline the state retail investors are in at present. The stock market has rebounded sharply this year to go up by over 65% after touching the 8,000 levels in March. And volatility and swings in stocks during 2009 have once again proved that no one can time the market to achieve desired results. Rather than losing sleep over lost opportunities, your priority should be to get your portfolio right for the coming year. Here're five investment places you can put your money in the new year.
VALUE STOCKS
Every bull phase throws new winners. If it was Unitech and oil drilling company Aban Offshore which arrived on the big stage in the previous bull run (2000-08), then the 1992-2000 bull period marked the emergence of media house Zee Entertainment and IT major Wipro. With the stock market, as per technical analysis, setting itself up for a larger bull run that is likely to begin sometime in 2011, you can look to buy scrips in the mid-cap space next year. Value stocks — better known as sleeping giants — have generally concentrated in this segment.
IT'S A GOLDMINE THERE
It's a tactical call. In the short-term, the yellow metal's outlook looks promising. Given the demand-supply mismatch and flight of money into metal, gold is a good hedge against likely inflation and currency fluctuation.
Wealth managers say it won't be a bad call for investors to allocate some part of their funds in this asset in 2010. Gold associated exchange traded funds had a fantastic time on the exchanges in 2009. Gold BeES, UTI Gold Exchange Traded Fund, Kotak Gold ETF, Quantum Gold Exchange Traded Fund — Growth and Reliance Gold Ex-change Traded Fund — Dividend have all delivered over 30% returns over the last year.
INVEST IN DIVESTMENT
They are not only back in fashion but are anticipated to lead the country's next growth spurt. Public sector undertaking (PSU) stocks in the BSE PSU index have all gained on an average 94% over the 365 day period. And analysts feel PSU stocks that are still under priced — quoting low price-toearnings multiples or price-to-book value of less than one — can be good investments going into the new year. Disinvestment can propel these stocks to new highs. Investors should keep a close eye on these scrips.
THE GROUND REALITIES
This asset class has not yet lost its sheen. The slow and steady buying in this space has, in fact, started the sector's long march back. Historically, real estate prices have tend to move up when inflation is rising. An analysis by PropEquity, a real estate data analytics and research firm, last week revealed that budget homes have indeed started turning costlier. Four in 10 projects surveyed witnessed a price hike during the last six months. It's still a solid investment. It's just that buyers need to do more homework today before investing
GETTING TO CORE OF INVESTMENT
It's a story that has been talked about incessantly over the last few years. And possibly that's why infrastructure stocks, despite gaining retail investors' interest, have so far under performed against market expectations. Lack of earnings visibility, analysts say, has contributed to this trend. But at the same time, they feel it's a story that can't be cast aside in hurry. It will succeed over the mid-term. In this space, investors should buy fundamentally strong companies such as Larsen & Toubro and Punj Lloyd which are aligned with domestic economic development.
LEAR N I NG S FOR R ETAI L I NVE STOR S
• Timing the market can never generate returns, but focus on valuations can make a difference
• Disciplined approach and asset allocation is key to wealth preservation and creation
EXPERT Speak ON STOCK MAR KET I N 2010
• Equity market will continue to be volatile. Corporate earnings growth and liquidity in system however can provide support
• Global factors, dollar movements and oil prices can play spoilsport
