The consolidate of corporate India has seen business groups get leaner and meaner. TheTatas, the Birlas, the Ambanis are all looking at greater efficiencies in their businesses,squeezing out the last rupee from restructuring their operations, finances, divisions, profitcentres. Almost all the companies have seen smart growth in sales and profits. TheSensex is up 60 percent since January 2003, many stocks are up many times over-notmerely because of ‘ sentiment’ but because the markets are finally recognizing the power of performance, the untapped potential of Indian enterprise, the ability of Indian businesses of adapt.
Rates on small savings will need to come down in line with the benchmark sovereign yield curve. Also, given the asset-liabilitymismatch, schemes like PPF may need to be wound up.
In place of debt fund, one should look at MIPs in these times as thedownside for equities looks negligible.
In a diminishing-returns environment, unit linked plans offer policyholder an opportunity to make big gains on their investments.
Despite lower returns, it is prudent to allocate 5 percent of your investments to gold, as it isn’t volatile like stocks and provides ahedge against uncertainties.
We expect equities as an asset class to provide attractive returns over the next five years. While the ride may be bumpy in the near erm,the long-term growth will be good.