Equities, realty, gold, FDs: Here's how to invest Rs 1 crore in this market

The ongoing volatility in the equity market provides opportunities to churn portfolios and pick up some quality stocks. However, is it the right time to stay overweight on equity amid the uncertain environment in the form of rising interest rates, concern over inflation and sustained selling by foreign institutional investors?

Analysts at five brokerages suggested investors put 40 per cent-60 per cent of wealth in equities and the rest in other assets including fixed deposits and gold, among others.

The benchmark equity index BSE Sensex has declined nearly 5 per cent on a month-to-date basis till May 20. On the other hand, it has lost nearly 13 per cent from its all-time high of 62,245.43, scaled on October 19, 2021.

Going ahead, Mitul Shah, head of research, Reliance Securities, is of the opinion that the market is likely to stay volatile due to ongoing inflationary concerns.

The Reserve Bank of India (RBI) intervened earlier than expected in May and increased rates by 40 basis points. The Wholesale Price Index (WPI) in India rose further to 15.08 per cent in April 2022 from 14.55 per cent in March 2022 and the Consumer Price Index (CPI) jumped to 7.79 per cent in April 2022.

“There may be another rate hike in the coming months as the recent MPC minutes released earlier in the week pointed to a hawkish policy to curb inflation rates, thus weakness may continue in the near term,” Shah said adding that for 1 crore investment, market participants can allocate 40 per cent of wealth in equity, 30 per cent in debt and balance in gold, commodities and real estate.

Mohit Nigam, head-PMS, Hem Securities, said, "For a 1 crore investment the market is ripe for investing 50-60 per cent of it while keeping the rest available to invest in tranches of 15-20 per cent capture the sudden corrections seen on the specific days. Picking the right stock at the right times and holding them for the long term is the mantra for wealth creation.”

Amit Gupta, fund manager-PMS, ICICI Securities, said, “From an asset allocation perspective, one should invest 60 per cent in equities, 30 per cent in debt and 10 per cent in gold.”

G Chokkalingam, founder, Equinomics Research & Advisory, added that the investors with an average risk profile may consider 30 per cent safe fixed-income securities, 40 per cent equity, 20 per cent real estate and 10 per cent in gold and silver.  

“Within the equity asset class, one may consider 50 per cent to large caps and from the balance 50 per cent, 30 per cent to large midcaps and 20 per cent to small caps,” Chokkalingam said.  

AK Prabhakar, head of research, IDBI Capital Markets suggested diversifying the investment with 60 per cent in equities 25 per cent in debt and 15 per cent in precious metals.