After coronavirus took toll psychologically, some of the asset classes gained, skyrocketed tremendously as appeal of safe haven assets inched higher. And now, here we will tell the likely prospects of the different asset classes as we have now entered a new decade and a new year:
After crisis hit equities in May on the back of Covid 19 led meltdown which saw Nifty slump to levels of 7000 and now amid US elections, optimism around Covid 19 vaccine and now as brokerages and analysts view their run to continue in 2021. With JP Morgan forecast levels of 15000 levels for the Nifty by December and Sensex is seen to be at 50,500 by next year beginning.
Now the liquidity push by global economies will find way into equities and propel Indian equities higher too, plus the Covid 19 vaccine optimism pins hopes of a economic revival sooner.
There is also a view by analyst at Prabhudas Lilladher that as yield are globally in negative, they are finding way into gold and other alternative asset classes. Also foreign investors are keenly interested in Indian equities and are dropping off investment in other countries to park their money in India. Foreign institutional investors net bought more than Rs 1.6 lakh crore of Indian equities in 2020, including a record monthly inflow of over Rs 70,000 crore in November after the US elections.
Now as earnings growth and demand recovery is seen and there is now optimism also on the Budgetary front to be released on February 1, Indian equities will remain upbeat.
Garg expects a double-digit rally in Nifty by the end of 2021 on the back of increased retail participation, favorable policies by the government, demand resumption and fresh foreign inflows.
Gold became the most preferred asset amid all the chaos, though the precious metal was offloaded for covering losses in equities. And scaled to a high of Rs. 57000 per 10gm owing primarily due to low interest rate regime globally which reduces the opportunity cost of holding gold, stimulus programs to tackle the Covid 19 fall-out, weak US dollar.
For gold in the first half of 2021, there will be a possible run up owing to US stimulus, weaker dollar as well as improvement in demand. And possibly next year the sheen could be slightly taken off as the economic recovery gathers pace and there is shift to risky assets.
Cryptocurrency: William O'Neil pointed out that the digital crypto is hitting its highest level in nearly 3 years. Now as per the belief of Nagda, head at Prabhudas Lilladher changing dynamics as well as increased digitization around conventional dynamics as well as asset classes are providing cryptos such as bitcoin a prominence as a mainstream payments solution.
Now what should investors do?
A highly calculated investment as well as asset allocation strategy needs to be taken as any disturbing news on the Covid 19 front that has come with the new mutant of the virus or any geopolitical stress can be very disastrous for investors and they need to properly assess their risk profile.