If I told you that the best asset to invest in today is domestic equities, you would probably laugh at me. You would then point out that we are still in the middle of a war. Meaning, that gold would be a safer bet and that markets could fall further still. So, what exactly would be the point of investing in equities now? Instead, sitting on cash or a fixed deposit would at least spare you of the misery of losing money. And I would tell you that you’re right on many counts, but hear me out.
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Here’s where you are right. Markets could go lower from where we are today. After all, the war has disrupted the supply of critical commodities like oil and natural gas. Even once the Strait of Hormuz opens up, it could take months for supply to normalise. And the price hikes that you’re seeing today? Well, they could be here to stay. There’s been enough seesawing on negotiations to keep markets on edge. FIIs have aggressively sold Indian equities. All these forces may keep markets range bound. The important and difficult question to answer is how long markets will be range bound. While this may not be the best time to invest, it’s still a good time to invest. As Mark Zuckerberg puts it, “Done is better than perfect.” The Nifty 50 is still down roughly 7% from its median valuations. The last time valuations were this cheap: 2023.
Even after the market fall over the last few months, you’d be sitting on a pretty 30% profit. So that’s the kind of opportunity that’s staring at every investor today. Why miss out when opportunity is knocking on your door?
While domestic equities offer value to an investor – not all parts of the market are worth the risk. Discretion, continuous deployment, and risk management must be part of your investment strategy. This is why sweep FDs, liquid funds, floater funds, or arbitrage funds are perfect solutions depending on whether you are looking for optimisation, liquidity, strategic allocations, or tax efficiency. There will be rainy days in the market this year and some dry powder will be put to good use. If you enjoy a more hands off approach to investing – and want to forget about market volatility, politicians, and Foreign Investors – then SIP your way through. Do your own thing while your money works for you.
This brings us to the all-important question: why not gold? Gold prices have been moving one way since 2022: up. To be precise, it’s more than doubled. Gold went from $ 1,800 / oz in January 2022 to $ 4,700/ oz today. But why? Two words: Central Banks. When the US froze Russia’s dollar denominated assets, Central Banks panicked. The dollar no longer seemed a safe way to build wealth, so they pivoted to another universally accepted currency: gold.
The same central banks that went into a buying frenzy between 2022 and 2025, are now looking to monetise that gold. This means the large buyers have become sellers. And investors could get caught on the wrong side of the trade.
Riding the equity wave can be bumpy. We’d love to journey with you through the ups and downs.
