Date:27/09/2008 URL: http://www.thehindubusinessline.com/2008/09/27/stories/2008092752091300.htm

Back How to weather the global financial storm

Experts suggest shunning real estate instruments.

Mr Arun Kejriwal of KRIS wondered whether “retail” investor was still walking the Street.

Jayanta Mallick

Kolkata, Sept. 26

A sense of sinking has suddenly gripped the local market as the Wall Street financial market crisis increasingly appeared an all-encompassing bottomless pit. According to Mr Ramdeo Agarwal of Motilal Oswal, the search for a bottom is futile in this time of deep uncertainty.

Mr V.K. Sharma of Anagram Securities felt some 2.5 lakh crore worth of investments by FIIs was a potential time bomb for Dalal Street. “It’s time for a long vigil where there is no room for false confidence if we witness occasional bounce-backs,” he said.

What does a retail investor do in this situation? Mr Arun Kejriwal of KRIS wondered whether “retail” investor was still walking the Street.

“Cash is King”

Mr Amitabh Chackraborty of Religare was blunt in advising a complete exit for the small investors, who have let themselves more than a year’s horizon. “De-leverage, get out of equities because their value may erode to half in the next two quarters and dollar may plunge to the extent of losing the status of the being the reserve currency for the globe; get into gold or gold ETF, liquid funds or fixed maturity plans, which do not have exposure in real estate debentures.”

“Don’t panic”

Mr Agarwal, however, felt that though no resolution was in sight for the global financial market crisis, there was no need to panic. He also felt that investors, who are still leveraged, should extinguish the leveraged position altogether and get out for another 6 to 8 months.

“Long-term investors with 18 to 24 month horizon should stay put,” said Mr Gul Teckchandani.

He was of the opinion that staggered and systematic investment plans could be one option for the investors who want to enter or re-enter now. Buy at dips — for every five per cent fall, matching percentage of investible fund may be used.”

Mr Kejriwal and Mr Agarwal also suggested staggered SIP. Mr Agarwal, however, clarified: “Don’t look at the indices, go for deep value while building a portfolio step by step in moderate doses.”

Local fundamentals

Mr Kejriwal felt eventually, after two quarters, local fundamentals, however, would assert on the sentiment. He felt from mid next year, things would turn for the better.