Where should I put my Rs 10 lakh? Make large stock investments, advises Srikant Subramaniam of Kotak Cherry

 Where should I put my Rs 10 lakh? Make large stock investments, advises Srikant Subramaniam of Kotak Cherry

Where should I put my Rs 10 lakh? Make large stock investments, advises Srikant Subramaniam of Kotak Cherry

The Reserve Bank of India will continue to put a lid on interest rates for the time being, but they may relax in the second half of 2024. The CEO of Kotak Cherry, Srikant Subramaniam, advises investing 60–70% of your Rs 10 lakh in stock, 25–30% in debt, and the remaining 10-15% in alternative investments, including as gold.

In comparison to many other nations, such as the US, UK, Eurozone, and Asian rivals, the Indian economy is doing well. The online investing software Kotak Cherry, developed by Kotak investing Advisors and released in 2022, has done a good job of managing interest rates, inflation, the current account deficit, and the fiscal deficit, according to CEO Shrikant Subramaniam.

Subramanian discussed his opinions in an interview with Moneycontrol on the preference of younger investors for financial investments over tangible assets, the recent surge in the stock market, the recent upswing in the mid- and small-cap sectors, the possible trajectory of interest rates, and their implications. worldwide trends affecting Indian markets. Revised passages:

Today, the majority of your clientele will be those in the 18–45 age range. Do they invest in different ways?

The elderly have seen market cycles. They exhibit long-term inclinations and a great deal of patience.

A 'follow the community' mentality, short- to medium-term profit-seeking vision, and social media activity characterize young investors. Consequently, there is a propensity to be swayed by the trend if there is a lot of chatter about a certain company or investment channel.

The fact that these investors are open to investigating other options, such as bonds, overseas investments, infrastructure investment trusts (InvITs), and real estate investment trusts (REITs), is positive.

Indian investors used to have a significant preference for tangible assets like gold or real estate. The younger generation favors financial riches that is well structured.

Every day, stock indexes reach new heights. If individual investors want to make an investment right now, how should they go about the equities markets?

The markets have become more expensive. However, in actuality, India's macroeconomic situation is somewhat better than that of many other economies worldwide, particularly those in Asia. It is encouraging for us that oil hasn't increased to the point that we anticipated it would despite two conflicts.

We have been successful in keeping interest rates, inflation, and the budget deficit all within manageable bounds. Additionally, our current account deficit is within our projections. In many nations, no macroeconomic metric has been affected as much as this one has.

Investors should be aware, however, that the market is not a one-way street, and the gains it has already seen should hold. Although there could be some lateral consolidation, a significant crackdown or vertical decline in the Indian markets is not what we anticipate.

How do you interpret the fervor among individual investors and the boom in small- and mid-cap equities and mutual funds?

Large-cap equities, or more established blue-chip corporations, seem to be doing far better right now than mid-caps and small-caps, which have increased by almost twice as much as the market as a whole. Earnings have not really kept up with the growth in share prices in several of these stocks. We will thus continue to exercise caution with these two counters rather than the whole market.

We would advise caution for new investors with a trading mentality who are looking for quick profits. Here's where some unfavorable shocks from the markets may occur. A well-balanced equity portfolio should consist of around 70–75 percent large-cap stocks and 25–30 percent mid- and small-cap stocks. This is another area where we should exercise caution if there is an excessive bias towards mid-caps and small-caps.

Will the stock markets be impacted by the elections? Do you anticipate unrest leading up to the elections, particularly after the Budget?

We're not saying the market is cheap just because we're mostly neutral. Unless they have a very short investment horizon, we don't see any compelling rationale for investors to remove money from the market.

Uncertainty is disliked by the market. I would maintain a low chance of significant volatility if the market attitude is one of clarity and a clear winner. Things may be different, however, if the market detects that a split decision might emerge. We shall therefore learn within the following one to two months.

What additional national and international issues do you see?

There are two ongoing conflicts. They have been kept inside a small region for the time being, but there was a real risk that they might spread to far broader geographic areas. In the event that these fights play out in a manner that surprises the market badly, rising oil prices might result in inflation.

The majority of nations, including Japan, the United States, the United Kingdom, and the Eurozone, are experiencing larger deficits than at any other point in their recent history. Fortunately, this is not a major problem for India. Crude oil prices and worldwide inflation will be influenced by how these industrialized nations handle their mounting deficits and the effects of the two continuing conflicts, as seen from a global macro viewpoint. I'll keep an eye on them to prevent unpleasant surprises.

What is the future trend of interest rates expected to be? What will the RBI probably be thinking on December 8?

Though it's always risky to speculate, I believe the halt will last for the time being. We are well-armed; the macroeconomic in general and growth are both looking well. While it's not where the RBI would want it to be, inflation is still under control.

And when do you think interest rates will really begin to decline?

If rates do not rise further, they may if they do in the second half of 2024.

Today, where should I deposit my Rs 10 lakh?

First and foremost, it is important to remember that this Rs 10 lakh may represent various things to different individuals. We must thus make some assumptions. First, the funds are owned by a salaried investor in his or her 30s to 40s who has no debts. He doesn't need this money in the next six to ten months, and he is neither too ambitious nor cautious.

If that's the case, she may allocate 60–70% of her assets to stock, 25–30% to debt, and the other 10-15% to alternative investments. Additionally, equities investments may be a combination of passive and active funds, with the remaining 55–60% going to reputable active funds that have produced strong long-term returns, and the remaining 35–40% going to index funds or exchange-traded funds (ETFs).

And within the loan?

Our preference is for medium-term debt. In other words, debt instruments that provide the chance to lock in the yield for a period of around five years.

You may invest your loan share straight into debt funds with a five-year duration, or you can split it 50/50 between schemes with a 10-year lifespan and funds with a three-year tenure. If you allocate 10% of your investment amount to alternative investments, then you should invest 5% in gold and the remaining 5% in securities such as REITs. Any significant volatility in the US dollar, the stock markets, or interest rates resulting from worldwide events may be well-protected against by holding gold.