The world is witnessing a correction on account of the possibility of rising interest rates. Your portfolio is probably testing your temperament as an investor as Indian markets are witnessing the double whammy of ltcg imposition in the budget and the prospects of rising interest rates in the US.
Let us evaluate your portfolio situation
Debt portfolio: If you are a gsec investor/duration investor you have experienced volatility in your portfolio. It will be prudent idea to look at accrual based ideas which are short term bonds with a maturity of upto 3 yrs and are more likely to deliver steady returns in the region of 7-8 percent. An increase rise in crude prices is likely to create more volatility in the bond portfolios and hence a shift to accrual funds is recommended.
Debentures which are AA/A+ may also be considered to generate higher returns than fixed deposits.RBI Bonds which offer safe returns of 7.75% per annum currently for a period of 6 years are also good opportunities if you are comfortable with the liquidity not being available in the interim.PSU Bank deposits can be considered to be transferred to RBI Bonds if liquidity not being there is not a concern.
Equity portfolio: It depends on where as an investor you are positioned for portfolio level.
Large cap funds: Large cap is a good play on the earnings growth going forward. The market correction offers a good opportunity to buy at lower levels from a medium-long term perspective.Our view is 9820 is likely to hold at a nifty level.
Midcap Funds: Midcap funds are in a sell on a rise mode. Our portfolio call since the last 12 months has been to reallocate to large caps from midcap. Partially positions can be liquidated and systematic transfer plans implemented to ensure that volatility can be waded through.
Small cap Funds: If the investment has been made with a 5-10 year horizon then it is a good play on the markets as a wealth creation tool. Being cyclical and volatile the exposure should not be above 10% at an equity portfolio level.
PMS: PMS’s with a large-cap /multicap focus are likely to deliver returns in the coming year subject to no major downsides happening on account of policy changes by the Government.
 AIFS: AIFs with a track record can be considered by Investors. We recommend AIFs with a liquidity option like Hedge funds under Category 3 AIF’s and Real estate Funds selectively.
 You can write to us to chart your path at anirudh@ashianafinserve.com.