Investing: Paras Adenwala
My daughter will get married next year. We need to buy jewellery for her wedding. Given the price of gold, we wish to delay the purchase. However, the funds (Rs 4 lakh) are lying idle in my account. What are options to deploy the money? Or, should we buy the jewellery? Is a further price rise likely?
Since this is a necessity-based investment, please don't delay. Gold prices, after some correction have begun to rally once again. It is possible that the prices may further strengthen ahead of the marriage season.
Among the IT companies, Infosys has not been doing well. But others like TCS and HCL Tech have done well. Is there a case for individuals to tweak their IT portfolio? My stocks portfolio (worth Rs 5 lakh) largely comprises of Infosys and TCS (worth Rs 3 lakh). Of this Rs 3 lakh, Rs 2 lakh comes from Infosys. Should I sell Infosys and buy more of TCS or some other IT stock?
At the current levels, Infosys does not seem to have too much downside. The valuation differential between both these companies is at a historic high. Hence, any improvement in results by Infosys, will propel the stock and bridge this valuation gap. Further, expectations from TCS of good results are quite high and hence any gap in quality of results compared to expectations, could lead to some depreciation in the price. You could also consider some well performing stocks like Geometric, Mindtree Consulting, for investment, with a longer term perspective.
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I want to dabble in derivatives as I learnt it is a hedge. Is that right? Would you advise derivatives?
Derivatives are used by professional investors to hedge. There are several traders who use derivatives to speculate. Being extremely volatile and hence risky, it is advisable to steer clear, of these instruments. However, if you still insist, please use the services of a derivatives expert.
I have been investing for the past 10 years but only in equity diversified funds. Now, I wish to invest in stocks. While large cap ones will be safe, the smaller ones will help fast growth. Which one will you advise to new stock investors and why?
It has been wise of you to continue your investments in equity diversified funds. Equity funds offered by mutual funds are a good medium of building wealth, over the longer term. Since you wish to take more risk, you could consider investing in midcap or small-cap funds offered by mutual funds as opposed to investing in diversified equity funds. Direct investments in stocks should only be done by investors who have the time and the expertise to successfully manage their portfolios.
The writer is managing director & principal portfolio manager, Capital Portfolio Advisors.