What investors should do: Make the most of debt opportunity

Aug 12 2013, 22:13 IST
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Mutual fund players agree that they have taken mark to market hit. Mutual fund players agree that they have taken mark to market hit.
SummaryDrop in returns saw investors pulling out a net of Rs 45,296 crore from liquid/money market products.

on an invested portfolio and yields have gone up and our portfolios are MTM,” said Nand Kumar Surti, MD & CEO, JP Morgan AMC.

Should you invest now?

While RBI continues to take fresh steps to contain further depreciation in rupee there is uncertainty in the market on how the rates will move. Experts feel that in the medium term, rates should come down as high interest rate is not good for the economy and RBI too has stated that it will reverse its measures once rupee stabilises.

In such an environment with interest rates ruling high, investors can look to benefit from the high interest rate regime.

“As compared to a month ago, all fixed income products look attractive for investment and since the the short term rates are higher than the long term rates, investors can look to invest in short term income funds for good returns over the next one year,” said Dhawan.

There are others who vouch for only longer term investment as the short-term remains uncertain on the kind of actions that RBI can take to contain rupee fall.

“There can be short-term pain and the environment looks uncertain but for 18-24 months it is a very good time to enter,” said Bhatia.

July 15: RBI hiked short-term rates by raising Marginal Standing Facility rate by 200 bps to 10.25%, restricting the overall access by way of repos under LAF to Rs 75,000 crore and conducting open market sales of government securities of Rs 2500 crore on July 18

July 22: It rationalised import of gold by making it incumbent on all nominated banks/entities to ensure that at least one fifth of imported gold is exclusively made available for exports

July 23: The central bank modified the liquidity tightening measures by regulating access to LAF by way of repos at each individual bank level and restricting it to 0.5% of the bank’s own NDTL

August 8: To bring stability in the currency market, the RBI decided to sell Rs 22,000 crore of Cash Management Bills every week to drain out liquidity from the system.

IMPACT: The rupee has failed to strengthen and continued to remain volatile despite various RBI measures. It plunged to an intra-day low of 61.80 earlier in the week and closed at an all-time closing low of 61.30 on Wednesday amid huge demand for dollar. The RBI has been selling dollars to prop up the rupee but the currency has remained

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