The year 2011 turned out to be a pretty forgetful one for the Indian investor. While that might be the case, what must not be let go of are the learning that has materialised out of the events that shaped the tumultuous year.

Equities: Volatility is thy middle name

Equity markets are known to be volatile, but even by those standards this year was full of surprises, every single trading day being nothing short of a roller-coaster ride. It was a rare event when the markets did not sway more than 100 points either way. Flat trading sessions were almost unheard of. The year 2011 was characterised by negative news including big ones such as scams (some of them supposedly government-sponsored), rising inflation and corresponding hardship on borrowers, the tanking of global markets and son on. All this did not help the main indices which, on a year-to-date basis, corrected by a whopping 23.5%.

Practically every sector was affected, barring the odd FMCG stock that closed decently higher than its January open, true to the defensive nature of the sector. Metals, capital goods, realty and power had 35-40% knocked off each, on a year-to-date basis. Rise in input costs, margin squeeze, and a poor project pipeline were the prime reasons for the sharp drop-off. Healthcare, auto and, surprisingly, even telecom were spared severe badgering. Amid weak global cues like the euro zone crises, Japan?s tsunami, etc, there were domestic woes such as poor corporate governance and political unrest that came to the forefront and punctured consumers? and investors? confidence alike.

Outlook: 2012, on the equities front, is not likely to remain a bed of roses; the Reserve Bank of India (RBI) has finally paused its cycle of rate hikes, which clearly indicates that the government is hard pressed to ensure a decent GDP growth for FY12. Input costs still remain a key concern and is expected to abate only over the first quarter of the calendar year. IT budgets are likely to see very marginal growth or could even see a cut-back. There appears to be a slow season ahead of us, at least for the first half of calendar 2012. There could be some change in the pattern only in the second half and that too only if there is some sort of positivity; else it will be yet another year of unrest and volatility.

Fixed income: Have you peaked yet?

Fixed income players clearly emerged as the winners for the year but there are subtle signs that it has stagnated around 7.5% while interest rates went up from a sober 5.5% to 7.5%. A huge 36.5% rise over the year was simply phenomenal. Most fixed deposits for one year are quoting close to 9.25-9.5% per annum, which is closer to what was quoting in 2008 when it was at its zenith.

Outlook: Interest rates have clearly taken off from where they started; it is highly likely that the rates would make a turnaround over the next 12 months. If one does want to lock in the interest rates while they are playing at such dizzyingly high levels, then the time is ripe. As interest rates drop, if one is capable of playing it right, one could buy tradeable bonds now and sell them when interest rates drop. This will provide significant upside in the form of capital appreciation. For someone who is a passive investor in fixed income, one can continue to clock interest income. If one misses locking in the interest rates at the peak, then there is no worry there ? income funds are an ideal option in a falling interest scenario and they may just be back in vogue in 2012.

Gold: Losing sheen?

All that glittered this year was indeed gold. Clearly, gold has had a dream run over the past several years, but towards the latter half of the year, it took a shaky stance. However, gold continues to trade at relative highs and is the safe bet while economies dwindle in less hope and more tremor. The recent shakiness can be attributed to the strengthening of the US dollar against the backdrop of the euro zone crises. Gold has had an inverse relationship with the dollar in the past and this time too this was reiterated.

Outlook: The strengthening of the US dollar is merely based on weakening European economies and the data cues coming in are deliberately decent given their base effect. This phenomenon is, however, only temporary. If there are no fundamental changes in the economy, the currency strengthening is not justified. Given this, the dollar is likely to come creeping back to appropriate valuations and this will clearly bring back gold into the limelight.

There is no great upside left in gold from here onwards for someone who has ridden the wave since 2008, but for someone who has continuously invested in gold, it may make sense to continue investing on dips and making exits on spikes. It may not be the most opportune time to initiate investment in gold now; however, if one does cite an opportunity in the form of a sharp downturn, it may be the right time to throw some dough in.

Real estate: More pain left

After almost two years of gradual consolidation, real estate looks like it has found its own comfortable ground but whether it takes the right leap from here is something nobody can guess right. There has been a paradigm shift in the residential property space with more mid-tier projects coming into play. Prices have moderated to right valuations and there may be some minor downside seen if the economy does see some gloom. Commercial real estate has seen some demand coming in; however, this space could see some amount of turbulence if there is indeed a double dip as some analysts seem to fear.

Outlook: For many investors who are looking at residential property, price per sq ft it is not the only phenomenon to worry about. One has to give ample thought to loan rates. Rates are at a peak and one could wait for another six months before plunging into a huge capital-intensive commitment. For someone looking at realty as an investment, it is probably the right time, although there may be some price correction if the gloom days turn out to be extremely gloomy. But then, as they say, no one has ever got the bottom or zenith right.

The writer is CEO & founder of Right Horizons