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Debt Instrument Returns Beat Gold And Shares In 2015 For Indian Investors
At the start of the year 2015, if you told investors that debt, including fixed deposits would be the best bet in 2015, they would have dismissed your suggestions.
In fact, shares in India were soaring as there were lots of hopes from the new Narendra Modi led NDA government. Chances of being disappointed are very high when there is too much hype.
Equities a dampener in 2015
If we go by the Sensex performance in 2015, it was dismal. You have negative returns of 7-8 per cent. The Sensex, which closed at 27,507 points on Jan 1, 2015, is near 25,850 points on Dec 24. A drop of almost 1700 points.
Most of the stocks including those from the banking, pharma, commodity and capital goods space have collapsed. So, have stocks from the IT space.
Much of the bold reforms have not gone through this year. Apart from this growth worries in China and a hike in interest rates in the US, has left investors high and dry. To compound worries commodity prices, including crude oil have slumped.
As we head into 2016, one cannot say with certainty, if equities will deliver good returns. If you are able to get returns of around 10 per cent consider yourself lucky.
Debt has been the star of 2015
Those who invested in bank deposits at the start of 2015 would have earned closed to 9 per cent. Though, interest rates have dipped almost 100-150 basis points on bank fixed deposits, they have given pretty decent returns for those who invested in early Jan. The returns from debt instruments has beaten, equity and gold. We wish to emphasize when we say equities, we are taking the indices as a barometer. It is possible that individuals may have made money by investing in select stocks.
Gold
Gold prices was hovering closing to Rs 26,000 per 10 grams at the start of the year. We are currently close to Rs 24,000 depending on the city in which you are buying. Nonetheless, gold along with equities has given negative returns. This means, forget growth, your capital would have eroded had you to invest at the start of the year.
A hike in interest rates by the US Federal Reserve, fast appreciating US dollar and poor demand for physical gold and gold ETFs, has dragged gold prices lower.
Conclusion
As we head into 2016, interest rates on bank deposits are near 7.5-8 per cent. We believe that interest rates would stay at these levels, while there could be some hopes of equities and gold doing better this year.
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