Where to invest?
A big question for those who wish to invest in a safe direction, particularly in a period of uncertainty.
The next nine months will be a period of great uncertainty for investors as the country grapples with serious political, economic, and geopolitical turbulence simultaneously. So where one should put one's money?
But before we get to answering where to invest, let's understand the why. A few things are now a certainty, in terms of trends in the economy. And that's the place to begin.
First, GDP growth is likely to be lower than last year despite the expected agricultural bounty from a good monsoon. Consensus growth estimates are now in the range of 4.5 percent or even lower, and anyone predicting 5 percent and above is an outlier. When growth is down, corporate profits are unlikely to be great; this means profits will be under pressure, if not down. The other side of the coin is that this may be the best time to pick up good shares.
Second, inflation may remain elevated. While core inflation (non-food, non-fuel) is coming down due to the slowdown in consumer demand, non-core inflation may actually rise due to the need to cut diesel subsidies drastically, the likely increases in minimum support prices (MSPs) for food and higher demand for protein-based items such as milk, eggs, fruits and vegetables and pulses. Cost-push will keep food inflation higher and this could overwhelm the dent in manufacturing inflation.
Three, the above two factors lead me to suggest that short-term interest rates will stay high even if the longer-term trajectory should be down due to slowing growth. This means there is no interest rate nirvana in sight for the corporate sector over the next two years. But for investors, bonds and fixed deposits will yield more in the short-term. Four, the rupee will remain undervalued-which means in the range of 60-65 to the dollar-till the elections are over and we know what happens to capital inflows after the US Fed begins tapering off its bond purchases. This is both good news and bad news. It means exports will rise, and companies which face import competition will be protected. Their profits will rise. But companies with high import exposures will see profits being dented. Five, thanks to geopolitical tensions over Syria and Iran, one cannot rule out elevated oil and gold prices. Domestically gold is having a decent run, thanks to import curbs. India is the only country in the world where returns on gold this year have been positive. If we accept these realities, it becomes clearer where we must invest, but based on our personal levels of risk tolerance.
Despite unrest and uncertainty spreading all over, few sectors were unaffected and doing well even better than previous years. Such sectors include public relation, the most desired tool of all. Hence when there is question of investment, our personal preference is for about 10 percent in gold, 50 percent in fixed income and bonds, 10 percent in equity, and 30 percent in partnership with some one. This some one may be an individual or company also. If you believe upon an individual, the risk is with you, but if you intend to invest in a company, we would suggest you to pick up a growing PR company. We are confident that your decision of investment in a PR company will never be failure.
If you are interested to invest in a public relation company, please contact