Geojit Financial Services’ Vinod Nair Explains Schemes Suitable for Risk Averse Investors to Beat Risk and Volatility

Geojit Financial Services’ Vinod Nair Explains Schemes Suitable for Risk Averse Investors to Beat Risk and Volatility

Vinod Nair, head of research at Geojit Financial Services, said balanced and hybrid schemes are suitable for risk-averse investors to reduce portfolio beta (risk) and volatility. An investor can choose between conservative or aggressive schemes depending on their risk appetite.

Here are excerpts from the interview:

Q: What do you think of corporations, banks rushing to raise funds through bonds?

A: Credit growth is expected to pick up after the lackluster pre- and post-Covid period. The national economy is resilient and should be healthy despite the expected recession in the global economy. Banks are considering raising funds in anticipation of capital growth and erosion after the legacy problem of post-demonetization and repression of the grassroots sector, leading to high NPAs. Today, the equity market is volatile, driven by global headwinds, while the debt market is robust due to lucrative yields. The easing of regulatory restrictions on bonds and the strong demand from foreign investors are contributing to the fundraising.

Q: In the current scenario, which equity or debt mutual fund system is better for investors?

A: Balanced and hybrid regimes are suitable for risk-averse investors to reduce portfolio beta (risk) and volatility. An investor can choose between conservative or aggressive schemes depending on their risk appetite. In the case of debt, medium-term duration plans are a good option because the interest rate cycle is expected to increase in the short to medium term. In pure equities, regimes focused on the domestic economy, consumption and financials are attractive in terms of stability and valuation.

Q: Which sector should do better in the long term, what investors can expect?

A: The sectors in oscillation with the progress of the national economy should be able to hold their own compared to the rest of the other industries. Capital goods (electrical), green energy, electric vehicles, sugar, textiles and chemicals, electronics manufacturing are expected to quickly overtake. Opportunities are also emerging in sectors such as IT and Pharmaceuticals due to moderating valuations, although volatility may infer in the short term due to the downturn in the global economy.

Q: Both Sensex and Nifty have recouped their losses, given that where do you see the levels for these indices in the coming months?

A: It is difficult to predict the objective of the stock market in the short term. However, given the quantitative factors driving the ongoing performance trend, this rebound may continue in the near term given rising FII and domestic inflows, especially for small caps. Chart and F&O data suggest a ceiling of 18,000 up and 17,000 down for Nifty50 in the near term. On a fundamental basis, we have a base target of 18,000 for Nifty50 with a peak of 20,600 on a one-year basis.

Q How do you choose stocks to invest in? Are you going to give this mantra to our readers?

A: Stock picking is a strategy that must be constantly nurtured in tandem with the pull of the economy and the market. You can also do this passively by identifying the stock and investing and developing the life of the business. A key point that we need to understand is the business model of the company, i.e. the operational quality of the company compared to the industry. The company’s USP relative to the rest of the industry. This may be the company’s product, service or R&D department. These stocks typically outperform in the industry, and they significantly outperform the total market if the industry has a bullish outlook.

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