The Indian economy is recovering and there is growth in GDP but it will take some time to get back to its pre-pandemic state, finds a recent study by Union Asset Management Company.
At a conference held on January 18, various top officials of the AMC discussed the equity and debt market outlook 2022 and future business plans. The key speakers were G Pradeepkumar, CEO, Vinay Paharia, Chief investment officer of equity, and Parijat Agrawal, head, fixed income.
Based on 29 variables, it has been found that there has been a rise in the GDP, which has had a positive impact on the Indian economy. “Growth will be good from wider context in India. But the market will be more dynamic and volatile, so one needs to respond to the changing environment to cope up,” said Pradeepkumar.
The major focus of the discussion was on safe investment by retail investors. Aligning with the prediction of the Reserve Bank of India (RBI), the speakers also said that there will be growing inflation in the upcoming days. Based on the study, Pradeepkumar said, “We definitely expect the rate of inflation to go up. The gap between repo and reverse repo will be down. Liquidity will gradually reduce from the system.”
The speakers said that considering the market volatility, investors should focus on passive funds, but should be a little cautious at the same time. “Passive funds are basically some kinds of FMP (fixed maturity plans) with an open end. So, we examine them thoroughly, as they are extremely volatile,” said Agrawal.
For investors who want to minimize risks, it is better to invest in balanced advantage funds. “Balanced advantage funds are extremely good to produce a good investors experience,” said Paharia. Balanced advantage funds switch between equity and debt components depending on the market conditions and can help investors avoid extreme volatility.
The study showed that even in terms of credit, the Indian market is performing well as compared to 2020 when the Covid pandemic first hit the country. “We are cautious about credits as the market is doing well but it is yet to go back to the pre-pandemic level,” said Agarwal.
