Stocks and Fixed Income: How to Invest When Inflation Looks High | Jobs Vox


Debt is an important part of an individual’s portfolio because it brings stability. Some analysts believe that the return gap between debt and equity will narrow significantly next year and that inflation will fall further next year. Although Indian stock markets have outperformed global equities this year, some analysts say high valuations could dampen gains next year.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “Equity investors can wait for global markets to stabilize before making new commitments in this bullish market.

“Higher prices and interest rates may stop the rally. Fixed income assets are becoming more attractive,” he said.

In the year In its 2023 outlook, Kotak Mutual Fund said, “Globally, inflation expectations have peaked and commodity prices appear to be on the decline, with outflows of funds and an increase in interest rates by global central banks indicating that inflation has now eased.” The five-to-seven year segment offers a better opportunity to invest in fixed income funds. Talking about the funds, investors should ensure that their time horizon and the investment horizon of the fund are aligned.

He said money market funds, savings funds and low-duration funds would be more appropriate for investors looking to park money for the short term. “If you are looking at a medium to long term view, there are options like corporate bond funds, floating rate funds, short term bond funds, medium term funds and bank and PSU debt funds, bond funds and variable bond funds,” he added.

Banks are increasing their fixed deposit rates to attract funds as their credit growth continues to increase. Recently, HDFC Bank increased the interest rate on FDAs to 7%. Some small finance banks offer more than 8% to senior citizens. Outlook for 2023: “It could be a year of roller coaster ride and therefore diversification between debt, equity, real estate and commodities is very important. This is not the time to use justice. This is the time to maintain a neutral position for equity and use any correction as an opportunity. We suggest marginal overweight to large caps, and underweight small and mid-caps. Equal allocation to stocks as an asset class,” Kotak Mutual Fund said in a note.

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