Invest in equity funds for inflation-beating returns, low-risk appetite investors can look at hybrid funds By Harshad Patil The Indian equity market has always been generous to patient and disciplined long-term investors. The Sensex has increased around 600 times in the last 43 years and has given a handsome return in excess of 15% on a CAGR basis. The Indian equity market has been resilient to geopolitical tensions, macro-economic events, as well as global central bank action in the long term even as these events, have led to bouts of short-term volatility. So, it will not be an exaggeration to say that India has been in one long mega-bull market for most of the last four decades, albeit with periods of sideway movements and corrections. This stellar performance of Indian equities would have added immense value in the wealth-creation efforts of most investors who stayed the course and helped them meet their key life goals. Given this stupendous long-term record of Indian equities, it makes me a tad skeptical regarding the amount of bandwidth consumed by the market participants in trying to time the market by predicting market trends and factoring in the impact of all the possible factors they believe are driving market movements. Time and again such seemingly accurate predictions which make good coffee table discussions miss out the single most important reason which eventually dominates the market movement such as the global financial crisis or the Covid pandemic, which was not predicted by most market participants. Moreover, even if events happen as they were predicted, the impact of those events on the market might be exactly opposite to the conventional wisdom prevailing before the event. This may be seen from the market impact of events such as Brexit where the market reaction was not in line with what was earlier opined by experts. A long-term investor would do well to tune off from the day-to-day noise amplified 24×7 by the media, which ends up creating heightened volatility in the market. A long-term investor who can invest in a periodic manner and average out the market volatility would benefit from such market movement and stay invested for achieving their key financial goals. This approach helps to unleash the power of compounding returns over long periods and offers an extremely prudent way to invest. Given this perspective, an investor can make use of the inflation-beating long-term returns offered by the Indian equity market by investing in well-diversified equity funds with a proven long-term track record of consistently outperforming the benchmark. Moreover, investing in a disciplined manner periodically should help them manage the volatility to their advantage and stay invested over many years. For those investors with a much lower risk appetite, they can consider hybrid funds with a mix of equity and debt to manage their asset allocation in line with their risk appetite in a prudent manner. Also Read: Sensex, Nifty end volatile session in red, consolidation continues; be stock specific, look for global cues In summary, an Indian investor can compound long-term returns for wealth creation through the time-tested Indian equity market rather than attempt to chase short-term returns by seeking to time markets, switch asset classes and deploy leverage. As one says, don’t fix it if it’s not broken. (Harshad Patil, Chief Investment Officer, Tata AIA Life Insurance. The views expressed are the author’s own. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com. Please consult your financial advisor before investing.)
If the current trend continues for a longer period of time, not only oil mills but oilseeds growers will also not be able to get good rates of their produce, says Samir Shah, president of Gujarat State Edible Oils and Oil Seeds Association (GEOA). Shah who is also past president of SOMA says that due to various international factors rates of edible oils had gone up considerably, especially imported oils earlier this year.
“With a view to curb rising prices of edible oil, the Government of India reduced import duty on edible oils. Considering the fact that India is producing hardly 30 percent of its edible oil requirement, the decision was right at that point of time. Now when international prices of edible oils have gone down by 15 percent to 25 percent and high production period has started in edible oil exporting countries, the government should gradually increase import duty to protect local oil mills and oilseeds growers,” said Shah. GEOA has also made representation before Union Minister for Commerce & Consumer Affairs, Piyush Goyal to increase import duty.
In June import duty on edible oils was ranging from 35 to 55 percent, since then the government gradually reduced import duty and at present it is ranging from zero percent to 15 percent on different edible oils, he said.
Just a month back prices of edible oils were through the roof and the government took appropriate measures by reducing import duty in order to protect consumers, says Atul Chaturvedi, president of Solvent Extractors Association of India (SEA). “Prices of edible oils are coming down globally. Kharif sowing has already started across the country. In the interest of local farmers, it is high time to enhance import duty in a phased manner to encourage local edible oil value chain,” opined Chaturvedi.
On Thursday imported Palm oil prices were at around Rs 2100 per 15 kg as against local Rs 2700 and Rs 2550 of groundnut and cottonseed oils. Prices of other local oils including ricebran, coconut, soyabean and mustard remained as high as Rs 2350, Rs 2520, Rs 2500 and Rs 2580 respectively.
India imports around 13-13.5 million tonnes of edible oils, of which around 8-8.5 million tonnes (around 63 per cent) are palm oil. Though the price of other imported Sunflower oil remained at around Rs 2700 per 15 kg, but import quantity of the oil is much lower than that of palm oil.