latest communication indicated it is in the neutral zone as far as policy rates are concerned. However, with headline CPI now emerging as the nominal anchor, it could be difficult for the RBI to reduce policy interest rates yet. The communication points out that demand-side parameters are still strong and, unless aggregate demand in the economy comes off, the risks to inflation are on the higher side.
Invest for the long term
The general elections are likely to lend direction to the markets. In case of a positive mandate, cyclical stocks will get some momentum. Positive policy initiatives, such as structural reforms, removal of supply-side bottlenecks, expedition of stuck projects and boosting of capital expenditure will benefit the economy.
Brijesh Damodaran, founder and managing partner, Zeus WealthWays, says equity investors should look at stocks from an ownership point of view as returns over the long term would be higher. For debt funds, he recommends investing for a duration of over 12 months. And, with US equity making a comeback, gold may feel the heat. Even real estate is becoming less favourable with investors as prices have stagnated in the past two years.
Analysts say investments made with a long-term perspective would fetch better returns. As diversification is important for long-term wealth creation, investors must understand their risk profile, create a portfolio framework, and monitor it regularly.