Investors no longer know how to multiply their funds and what are the safe haven assets to put their hard-earned savings.

The bull run in Indian stock markets belies the declaration of the world’s sixth-largest economy amid the Covid-19 pandemic which is raging for the second year in a row.

Investors no longer know how to multiply their funds and what are the safe haven assets to put their hard-earned savings.

Chetan Parikh, co-promoter of Jasmine India Fund, a Mauritius-based fund, and Jeetay Investments Private Limited, an India-based regulated portfolio management company, explained how Covid-19 has been a catalyst for dominant trends like digitization and automation and what are the best investment choices.

“The profit power of many companies is underestimated in their reported figures due to supply bottlenecks and reduced capacity utilization. The competitive intensity of the Indian economy has diminished due to cash flow issues with the smaller players. Further consolidation of market share should translate into higher future profitability, ”said Parikh, holder of an MBA from the Wharton School of Business. Khaleej Times.

He believes that an investor should back gold and not exchange traded funds (ETFs) or gold bonds.

“One of the main reasons for buying physical gold is to hedge systemic risks in financial markets given the huge leverage and record levels of cash injections. Physical gold held with a non-bank depository presents relatively lower counterparty risks. These risks only become evident in the event of a financial crisis. Gold ETFs, part of the capital markets ecosystem, do not serve this purpose, ”said Parikh, who spends most of his time in Dubai and occasionally travels to Mumbai.

It sounded a cautionary tale about an investor’s offer to diversify portfolios and be bullish on precious metals.

“The future is unknown and unknowable. Making consistent predictions about the future is a myth. Diversification into uncorrelated asset classes can make a portfolio “antifragile”. Stocks are slaves to profit power, and while in the long run profit power typically increases, in the short run valuations are to a large extent determined by market psychology. Given the global depreciation of fiat currencies, bitter geopolitical struggles, significant systemic risk and the limited supply of gold, there is a bullish argument for gold. Diversified investment portfolios containing stocks and some gold investments are resilient, ”he added.

Mid-cap companies, according to Parikh, are an investment option.

“Mid-cap companies, as a group, have both a higher return profile and higher volatility compared to larger companies. But, as with any investment, stock selection and entry valuations are important. The quality of management and the strength of barriers to entry become more and more important as the size of the analyzed company decreases. In intermediate to advanced bull markets, small and mid-cap companies typically outperform large-cap companies. The flip side is that in corrective phases and bear markets they fall considerably more than large cap companies, ”he said.

FinTech is definitely the flavor of the season.

“Fintechs, or rather techfin companies, are the direction in which financial services and the banking sector are moving. The consumers of the coming decades are digital natives. Traditional banking, with its outdated systems, is being reinvented. Banking will become contextual and driven by technology that is itself shaped by artificial intelligence, the Internet of Things and high-speed bandwidth. Being able to navigate the changes in which branches and legacy systems become redundant, requires a very different mindset and culture than that prevalent in many banks, both in the public and private sector, today. hui. The Indian economy is growing and with rising incomes the market potential is huge. However, a decade from now banking will be a different ball game. Huge opportunities may abound, but massive disruption is also to come, ”he said. And AI-driven companies have caught the attention of investors.

“The confluence of a whole bunch of new technologies, shaping the next wave of innovation, be it cloud, quantum computing and mixed reality, among others. Today, valuations are driven by platform companies that benefit from network effects, costs of scale and change that lead to operating leverage as monetization opportunities arise. The algorithms that generate these opportunities improve with machine learning and AI, ”he added.

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Joydeep Sengupta




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