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Fixed deposits have been a mode of saving for a long time but now you can earn one-year's return on a bank fixed deposit in just a day. This can be done by investing your money in equities. 
 "An equity investor has to accept the swing of the pendulum. If he can average himself at the lower end of the pendulum into this market, probably he will make far more money in equity than in fixed income," Nilesh Shah, MD, Kotak <keyword id="6358378" type="CITY" weightage="20" keywordseo="AMC">AMC</keyword>, told ET. 
 
Of course this might look like an exaggeration, but there have been instances in the past when stock prices shot up more than 10% in a single day. 
 
In 2016, the benchmark equity indices might have disappointed investors so far, but there is no dearth of multibagger stocks. 
 Nearly 20 stocks from the smallcap space have more than doubled investors' wealth in last one year while 10 stock from the midcap space -including <keyword id="6358361" type="CITY" weightage="20" keywordseo="Biocon">Biocon</keyword>, Indian Bank, <keyword id="45609" type="CITY" weightage="20" keywordseo="JSW-Steel">JSW Steel</keyword>, Piramal Enterprises, HPCL and UPL, among others - have delivered over 50% returns. 
 
It is expected from the domestic equity market that it will remain rangebound for the next two months at least, say experts. However, investors can use any dip to buy quality stocks. 
 
The broader market indices are ending the calendar year broadly at the same level where they were at the beginning of the year while fixed income as an asset class has delivered double-digit returns courtesy an interest rate cut as well as a rise in liquidity thanks to demonetisation. 
 
However, things might be a little different for the fixed income space. Though fixed income remains one of the safest asset classes, betting on equities could just help create more wealth. 
 
Interest rates on FDs are most likely to fall further in 2017. At present, nearly all the banks offer rates between 6.5 and 7.2 % for tenures ranging from one to 10 years. This time last year, the 10-year G-sec yield stood at 7.7 % compared with 6.4 % now, a drop of 1.3 % over the past 12 months. 
 
"For investors, it is crucial to get the entry right and buying good stocks at right prices is important. If you invest in bank fixed deposit for one year, the likely post-tax return you are going to get after waiting for 365 days will be lower than what one stock can deliver on a single good day," Shah told ET. 
 
The only thing one has to look after is that to buy the right stock and choose the right time. It is a difficult task but the potential for good returns is very high too. 
 
Interest rates have come down over time and government policies such as demonetisation and GST implementation are likely to see a further drop in rates. 
 "Fixed deposits do not look like an attractive investment tool for the near term, if interest rates keep on falling. In this scenario, new investors should invest in equities and mutual funds, as current valuations offer them a good entry point," <keyword id="51020" type="PERSON" weightage="20" keywordseo="Dinesh-Thakkar">Dinesh Thakkar</keyword>, Chairman &amp; Managing Director, <keyword id="103837" type="PERSON" weightage="20" keywordseo="Angel-Broking">Angel Broking</keyword>, told ET. 
 
"A person in the age bracket of 25-30 years can look to invest in a portfolio where largecaps have more weightage than midcaps. One can also invest in mutual funds, which we believe are very effective tools for wealth creation," he said. 
 
(image: IndiaTimes)

You can get FD returns of one year in just one day. Here’s how

Indian chief executive officers (CEOs) have expressed disappointment at the Reserve Bank of India’s (RBI) decision to maintain status quo on the interest rate during its review of the monetary policy. The RBI had today kept interest rate unchanged at 7.75%. 
According to CEOs, corporates will not be willing to take loans for new projects at such a high rate. 
 
"The Indian corporates were expecting a rate cut in view of sustained low CPI, WPI and food inflation coupled with benign oil prices in global market helping a positive CAD (current account deficit). In my opinion, this was possibly the best time to have a rate cut and give a real impetus to the growth, which is yet to take off in Indian economy as of today," said Prabal Banerjee, president (international finance) of Essar group. 
 
"The RBI has taken a very positive step towards liquidity infusion by reducing SLR by 50 BP, but that liquidity may be difficult to avail of by everyone and give a real push to growth and economy unless it is associated with moderate cost. We look forward to more positive surprises from RBI as it happened in January," he added. 
 
Dinesh Thakkar, chairman and managing director of Angel Broking, said, "The RBI has kept key policy rate unchanged, as it had recently cut rates by 25 basis points in Jan 2015 and indicated that it will wait for more economic data and the budget to come out for further policy action. In my view, the ongoing fall in inflation is structural and sustainable and if the government also delivers on fiscal consolidation as expected, there is likely to be further easing by the RBI post the budget.” 
 
When the RBI had cut the rates by 25 basis points last month, corporate leaders had welcomed the move, and had also demanded more rate cuts.

India Inc Expresses Disappointment At RBI’s Decision To Keep Repo Rate Unchanged

It’s been a dream run for stock investors in the past few weeks. The fireworks started by Narendra Modi’s emphatic victory have made investors richer by Rs 11,57,200 crore. But many believe the best is yet to come. Market experts and analysts have proclaimed that this is the start of a multi-year bull run. Morgan Stanley’s Ridham Desai insists in a report that “the Indian market is moving from a cyclical downturn to a structural upturn”. 
 
The only thing that sets brokerage houses apart right now is the degree of their optimism. CLSA believes that over the next 12-24 months, the Sensex will touch 39,707, an upside of nearly 60% from the current level. Brokerage firm Motilal Oswal sees the Sensex touching 50,000 in the next three years. Karvy Stock Broking is more bullish and pegs the Sensex at 1,00,000 by 2020. 
 
ET Wealth reached out to experts from diverse areas of the financial services industry and sought their views on where the markets are headed and what should investors do now. Most of the experts we spoke to feel that the stock markets are on the cusp of a structural bull run, a market rally that could last for several years. After nearly six insipid years, investors can finally feel excited about their stock investments. 
 
What has changed 
 
What’s behind this overbearing optimism? The euphoria is primarily due to the overwhelming mandate to a political outfit widely recognised as reformist and development-oriented. For the first time since 1984, a single party has got absolute majority in the Lok Sabha. This means no more pandering to the whims of a motley group of political allies. “The big change is that we have a pro-development government with a majority, which gives it the power to execute. The positive results of this over the next 5-10 year period can be dramatic,” says Dinesh Thakkar, founder chairman and MD, Angel Broking. 
 
Analysts expect the new government to undertake sweeping reforms which will remove the hurdles to economic growth. “If the government can change even half the factors plaguing the Indian economy, we are in for structural bull market,” says Nitin Jain, CEO, Capital Markets, Edelweiss Broking. 
 
Should you invest more in stocks? 
 
If equity markets are expected to deliver handsome returns in the years to come, should investors make tactical changes in their asset allocation and invest more in stocks? Most experts believe so. Given the strong shift in sentiment and expectations of a structural bull run, many brokerage houses and fund managers are now recommending a tactical change in the asset allocation in favour of equities. Should you bite the bait? “Investors must certainly enhance their allocation to equities if they haven’t done so already,” insists Sandesh Kirkire, CEO, Kotak Mutual Fund. 
 
While a strategic allocation requires that you set specific allocation percentage to each asset class, a tactical allocation allows for a range within which asset mix may be maintained. So if your current strategic allocation requires you to maintain equity exposure at 50%, a tactical allocation strategy will allow you to increase your allocation up to 60%. This strategy essentially implies timing the market by deliberately hiking allocation towards equities at an opportune time. It may require that you step out of your comfort zone. 
 
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Not everyone is comfortable with this approach of tweaking the asset allocation in favour of equities. “An investor’s portfolio takes into account several factors, including his age, life-stage, risk profile, horizon for financial goals and macro economic factors. He should not tweak his asset allocation just because one of these factors has changed,” says Amit Kukreja, financial planner and founder of Wealth Being Advisors. 
 
His views are echoed by Jayant Pai, financial planner and head of marketing, PPFAS Mutual Fund. “Investors who indulge in ‘tactical changes’ at the drop of a hat are only traders who are deluding themselves. Changes should be undertaken either closer to the goal or on a fixed date every year. They should not be influenced by the level of the indices,” he says. 
 
Some investors would argue that the stock markets have already run up quite high and cannot afford much upside from current levels. However, experts insist that there is ample scope for an upside. “We believe investors should hold their nerve and increase their allocation to equities even now. This is because equities may be at an all time high, but valuations are nowhere near the previous peaks,” asserts Harsh Patwardhan, executive director and head of equities, JP Morgan Asset Management (India). 
 
Other experts also feel that investors should not try to time the markets. “Investors who are in a dilemma given the recent surge in valuations should focus on the long term prospects of the economy. Using the SIP route offered by mutual funds helps in maintaining discipline while managing the pitfalls of market volatility,” says Harshendu Bindal, President, Franklin Templeton Investments (India).

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