Options for uncertain times

S. Vaidya Nathan

AT A time when things are not looking good, there are few positive triggers. What are the options before investors? The following aspects can be considered:

*It would be difficult to identify the 'bottom' in stock prices precisely. So, linking investment decisions to this factor may not be a good approach.

*There could be a 10-15 per cent downside which may get reflected over the next three-five months or so, as earnings numbers for the second quarter come in.

*If retaliatory US strikes do not lead to a big run-up in oil prices, the next six-12 months could be used by investors with a two-to-three-year horizon to pick exposures.

*It may be better for such investors to go for frontline stocks or select mutual fund schemes with a decent track record over three to five years.

*Fund managers may not look at small and mid-cap stocks even when the economy improves due to fears of getting stuck with such stocks.

*There is a broad convergence in mutual fund portfolios in terms of stocks and sectoral preferences, except schemes of Alliance Capital, which have a higher tilt to tech stocks. But it is better to be within a small set of funds, such as Pioneer ITI, Zurich India, Alliance Capital and Templeton India (which has a poor long-term record but has done well in the last 24 months).

*It may be better to look at phased investing in select growth schemes such as Bluechip, Templeton India Growth,Alliance Tax Relief, Pioneer ITI Index and Franklin India Index Fund.

*If you prefer direct investing, stay with select frontline stocks, Avoid stocks of companies with poor practices; Zee, Himachal and many family owned stocks have shown the risks involved.

*Such of those investors who have an appetite for tech sector could invest in funds that have a high weightage to frontline tech stocks, such as Wipro, Infosys, and Hughes Software to name a few (it's a short list now).

*Capitalise on open offer opportunities. For instance, had one bought stocks such as Castrol, Foseco and German Remedies even after the open offer announcement had been made, there would have been tidy money to make (at least 40 per cent).

*Phase out the investing starting out in a month or two and do not wait for a bull run to start.

*Invest in select open-end debt funds, such as Sundaram Bond Saver, Pioneer ITI Income Builder, LIC Bond Fund, Chola Freedom Income and Templeton India Income (if you can stomach a little risk).

*If you seek fixed income opportunities, look into select post office schemes, such as Kisan Vikas Patra and POMIS as well as a few company deposits.

*And, last but not the least, take advantage of money market schemes and short-term liquid plans to invest funds over and above that required for quick use and which, therefore, has to be parked in your savings account.