Wealth Guide: Ukraine crisis infusing volatility: If you plan to invest Rs 10 lakh then tap Budget announcements

It is almost imperative that any disruption in the Russian region will be followed by concerns around crude oil prices given its dominant position as a producer and the world’s critical dependency on the same. Oil prices have been sustaining at levels a tad bit shy of the terrifying $100/bbl-mark

Investment decisions must be made based on own risk and investment profile with a longer-term strategy, only allowing for intermittent review and course corrections. Source: PTI

With the global economy nursing its wounds, the Indian economy is putting up a brave face as it recuperates the Russia-Ukraine standoff that picked up a rather inopportune moment to manifest.

It is almost imperative that any disruption in the Russian region will be followed by concerns around crude oil prices given its dominant position as a producer and the world’s critical dependency on the same. Oil prices have been sustaining at levels a tad bit shy of the terrifying $100/bbl-mark.

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We spoke to Nirav Karkera - Head - Research – Fisdom on how investors should use the current volatility to build a portfolio:

Investment decisions must be made basis own risk and investment profile with a longer-term strategy, only allowing for intermittent review and course corrections.

However, for those seeking a tactical play optimising on the budget announcements, the 10-lakh rupee investment can be split into fixed income and equity opportunities basis appetite for volatility.

In the fixed income segment, an orientation towards a four-to-five-year duration with exposure to high-quality sovereign and public sector debt should help.

Aggressive investors with a medium-term horizon can allocate up to 25% of the portfolio to sub-AAA papers while avoiding going beyond A and equivalent rated papers.

From an equity standpoint, the budget has been a prudent and rather calibrated one. The commitment towards growth is clear and the propositions can be expected to kickstart the virtuous cycle including public expenditure, credit offtake, private investments, supply expansion, reinvigorated demand as key tenets.

This orientation will most likely translate into some sectors being nudged into expansion faster than others, but clearly not at the cost of others.

While the expansionary policy benefitting cyclical sectors of infrastructure, metals, basic materials and capital goods is almost common sense, the valuation-conscious and higher-resilience investors can plunge deeper into second-order pockets of the economy to decide overweights.

Proposals focusing on broader infrastructure and logistics agenda along with specific attention to incentivising manufacturing, bolstering exports, and generating income, especially in the rural and agriculture-affiliated demography creates a strong case for consumer durables.

With credit-boosting schemes in favour of affordable housing, electric vehicles, infrastructure expansion and MSME development, one can expect a combination of high-quality banks, NBFCs and HFCs to undergo a strong margin-expansion cycle aided by healthy demand, stronger governance, rate environment and policy support.

While technology and allied services as a segment has been long viewed as a defensive play, the sector seems to be entering a multi-year expansion cycle with developments in specific favour of export-oriented firms in the segment.

The sector can be expected to serve as an efficient hedge in the near term and active performance contributor in the longer term.

What should your MF portfolio look like:

From an effective asset allocation and maintenance standpoint, dynamic asset allocation as a category has many funds that can be expected to augur well for investors.

For aggressive investors with a longer-term horizon, now could be a good time to stagger and allocate towards mid and small-cap-oriented funds.

Now could be a good time to build allocations towards funds with established credibility in identifying value plays.

For the tactical component, thematic plays in favour of themes like domestic manufacturing, banking & financial services, technology and consumption can be expected to do well in the near term.

Diversified global equities could be a strong addition; one must simply be cautious to not over-allocate to U.S. Technology stocks only.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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