Market at all time highs: To invest or not to invest

Equity has proved itself to be the best investment instrument as far as the returns are concerned provided that one has a medium to long term horizon. After a turbulent 2011, the equity markets did very well in 2012 and are continuing the momentum in 2013 owing to some key reforms by Government and in last 1 year expectation of a strong and decisive Government in 2014.

As we all know, markets have hit new all time highs and economic and political environment looks better by the day. Globally too, recovery is evident across the globe and markets look poised for more. While, equity markets are up, most investors are complaining of being left out or being trapped at wrong basket of stocks.

While there is a general feeling that this is not the right time to invest in equity, we feel otherwise. One must not forget that markets have made a new high after 6 years and after almost doubling up of EPS from 2008 levels. Also, policy paralysis which was plaguing the market seems to be a thing of the past now. While, 1 year has seen definite policy action from current Government and the expectation of a new strong Government will provide further impetus to the markets.

Although, volatile environment tends to keep investors away from this instrument, we feel that if one has a longer horizon, equity still remains the best investment instrument considering its ability to generate returns far superior than any other. However, due care must be taken while investing in equity and for retail investors Mutual Fund remains the best mode of investing in equity. At the same time, HNIs must consider investing in equity through PMS route which will enable personalized monitoring of their investments.

Hence, we request you to reconsider allocating a part of your portfolio in equity and reap the benefit of higher returns over medium to long term. While there may be some volatility in the lead up to elections, we still feel that markets will climb wall of worries and reach higher levels in medium to long term.

By Rajat Gupta– Research Analyst (Value Addition) – Concept Securities Private Limited