Posted by:S. G. Raja Sekharan
2014 was a wonderful year – this was the year when most investments (except gold) gave great returns – there is a good chance you have made decent returns if you were either on Direct Equity or MF or Real estate or even Debt funds.
So what does 2015 look like?
Here are my recommendations for 2015 –areas where you can make 20% plus returns:
Direct Equity - Stay invested in equity and increase your exposure to equity. I believe 2015 will be the year of equity markets in India. Globally US is doing better and EU, Japan are struggling, China is slowing down and the Emerging countries like Indonesia, South Africa, Brazil have problems – EU and Japan will keep the QE alive and that will mean that low cost money will be around in 2015 and a part of that low cost money will reach Indian shores –keeping the Indian stock markets high. Having said that, you have to be sector specific and company specific in approach. Many sectors like Real estate, Power sector, mining sector have not done well in 2014 and I do not see them doing much in 2015. The sectors to watch out for are:
Many of these small company investments were given to me two of my trusted analysts and I pay for their services and hence I cannot share their equity calls with you my reader – you can subscribe to their services as well and get those recommendations –call Jatin of Stalwart Value @ 09871675474 (http://stalwartvalue.com/about/about-us/) and Varun of Mitraaz @09739993370 (https://mitrazonline.com/)
Mutual funds that I recommend now: Just like equity, this is the season for you to invest in Equity oriented Mutual funds. The funds that I recommend right now are
Residential Real estate – this sector in 2014 has struggled to keep it's growth momentum –prices are high, looks unaffordable in most places and home loans are high at 10% - plus there is a lot of unsold inventory lying around. Needless to say that the big companies from this sector that are listed are not doing well – Prestige, DLF, Shobha, Oberoi Realty, NBCC are all struggling for top line and bottom line growth. As real estate sector has low volatility, the effects of this excess capacity will stay through 2015. Investors who have invested in real estate in the past 2 years will see difficulty in selling when their properties will be ready. So stay away from this sector except if you get a great deal. There is one caveat though to this – if you get land in urban area at a reasonable price – look at that seriously. Land in Urban areas will surely do well and there are no good or bad seasons here.
Commercial real estate is picking up in India and there are opportunities there -investment in office complexes need one to have larger budgets and loans are @ 14% - so only those who have the liquidity can invest here. There is a hope of RIET being launched in 2015 where with an amount of Rs 2 lacs (or multiples of that ) you can invest in rent bearing commercial properties. As and when it becomes a reality, we will read the fine print and I will share my views on these structures. In Bangalore if you want any help with commercial properties – I can help through my friends in the market.
Debt – even though I do not invest in debt funds – there are a few good funds that I can recommend - these funds have the security associated with debt and also returns that are better than FD – but remember that the returns are taxed if you exit before 3 years.
Gold – Gold will languish in 2015 – it is not worth investing in gold if you want ROI. Global investors are flocking towards the US stock markets and they will continue to do so in 2015 as the US economy is strengthening further. So the Global demand of Gold for investment will be subdued – it is currently at USD 1200 /Oz – and I expect it to be in the same range next year. In India, the price of gold will go up due to weakening of the Rupee – I expect a 8% weakening and hence gold price in India will go up by about 8% to 10%. This is as good as a fixed deposit return and remember India’s inflation will be around 7% in 2015. So it is not a great ROI.
So to sum up – invest in Equity directly (if you can) –otherwise invest in MF’s that invest in equities – in equities and MF’s keep an exposure to the higher risk /higher return small caps . Invest in urban land and commercial properties (if you can afford one) – Debt MF can be part of your portfolio but not too much. Avoid Gold as an investment. Aim at an overall return of 20% plus for your portfolio. It is easy to get this in 2015.
Want to also mention a few risks that are there in the horizon: