Anand Rathi has some advice for retail investors in 2024
During 2023, the largecap indices in India saw significant rallies. However, the current returns on these indexes for one- and two-year horizons remain lower than the corresponding long-term averages. Returns on mid and small cap indices, on the other hand, have been much greater than the respective long-term averages.
This is raising concerns about the outlook for mid- and small-cap stocks.
In contrast, the forecast for Indian bond market is improving. Slow but steady fiscal consolidation, the end of monetary tightening and possible rate cuts in 2024, likely large foreign inflows in the Indian debt market beginning in June 2024 because of the inclusion of Indian bonds in the global bond fund index, and continued bond buying by commercial banks are all factors that suggest a significant return on bonds in 2024. Many advisors advise retail investors to take profits in stock investments, particularly in mid and small company equities, and raise their bond allocation.
However, we believe that there are more important factors that the investor should consider while making such decisions.
We believe that investors should build their portfolios around strategic goals. Some key strategic considerations include expected portfolio return, risk tolerance, and investment horizon. It is commonly understood that there is a trade-off between risk and return, and these must be realistically set.
