Majority of the brokerages polled recommended that investors allocate 70-80 per cent of their corpus to the equity market as domestic equities are expected to give returns of more than 20 per cent in the new Samvat.
Equity investors have had a dream run over the past 12 months aided by global liquidity, surging corporate profits and influx of billions of dollars from first-time retail investors.
The Nifty50 index rose 40 per cent in the previous Samvat, whereas Nifty Midcap 100 and Nifty Smallcap 100 clocked gains of 70 per cent and 80 per cent, respectively.
“Albeit some hiccups in the short term, the Indian stock market is likely to deliver superior returns in the years to come. Hence, the ideal portfolio allocation for a risk taking young investor in the long term should be to overweight equities to a maximum of 60-70%,” said Yesha Shah, head of research at Samco Securities.
Brokerages such as Anand Rathi Shares and Stock Brokers and Reliance Securities suggested an even aggressive approach wherein, young investors could raise their equity exposure to as high as 80-85 per cent of their total corpus.
Besides equities, most brokerage firms suggested that investors should limit their exposure to fixed income assets to around 10-15 per cent of their portfolio to provide protection from any volatility in the stock market.
Brokerages also suggested that investors could take 5-10 per cent exposure to gold in their portfolio as a hedge against persistently high inflation. While gold’s performance over the past 12 months has been underwhelming, the asset still provides safety against a high inflationary environment, said analysts.
“The upside potential in gold prices is looking good from current levels of Rs 47,500 because inflation is rising across the world,” said Abhishek Chauhan, head of commodity and currency at Swastika Investmart.
