The uncertainty in stock markets still remains. Inflation and high crude prices continue to bog world economy. The corporate sector is facing a challenge because of high input costs and on the other hand, the tech sector is coping with the US recession. It is high time for investors to understand the situation before finalizing between debt and Equities.
A short term investors should invest in debt products as they give assured returns. On the other hand, if investors are prepared to wait for least three years, they can look at equity. But they need to invest in a staggered manner. For instance, look at daily and weekly STP’S (Systematic Transfer Plans). Here, a lump sum sets invested in a debt fund with a fixed amount getting transferred from it. Here, a lump sum gets invested transferred from it to an equity or balanced fund regularly. This will allow the investor to take advantage of market volatility by spreading his exposure. Systematic transfer plans are cheaper but they are applicable for investments of over Rs.50,000 as a smaller corpus can get invested in a matter of days.
The other types of investors are those who invest with a long-term point of view. These types of investors can also look at accumulating stocks in sectors such as capital goods, construction, media and entertainment. Aggressive investors can also concentrate on banking and financial services as these can bring a much needed reform boost. But one must keep in mind that these sectors are still not free from the problem of high interest rates. You should be aware that it is you who have to build your own confidence in the stock market.