It’s a changed India today. Indians have weathered the pandemic and are hopeful of a bright tomorrow due to the rolling out of COVID vaccine. They have shed their old habits and behaviour patterns when it comes to investment and are focused on building wealth. There are many out there who would want to know where to put their money, be it stock market, gold, real estate, mutual funds or bitcoins.
Astro strategist Hirav Shah who is a seasoned hand at making financial predictions given his long association with various sectors and industries, shares that investing in silver and telecom industry would be a wise move. He also predicts a huge surge in stock markets in the second half of 2021
2020 was the year of the pandemic. But 2021 brings with it new hope and the arrival of vaccines has sent out a positive push to the financial sector. After the slump in 2020, the markets are slowly and steadily picking pace and there is general positive spirit in various sectors.
Let’s figure out how stock market investments in metals such as gold, silver, real estate, mutual funds and bitcoins will do in the financial year 2021-22.
Future of Indian Stock market in 2021
Let’s begin by understanding how the stock market did in India in the fiscal year 2019-2020. Indian benchmark indices saw gains in double digits with the Sensex rising 14.4 percent and Nifty gaining 12 per cent. Though both the blue-chip indices posted gains, their smaller peers suffered losses as the country’s economic growth slowed to a 5-year low.
The BSE MidCap index shed 3.1 percent while BSE Small Cap Index lost 6.9 per cent.
In all, Indian stocks had a roller-coaster ride in 2019 thanks to general elections, a tax surcharge on the super rich and its partial rollback, a global trade war, a slowing economy and various other factors. The Nifty 50 returned over 7 per cent till May. The gains continued till July when Finance Minister Nirmala Seetharaman presented the budget for 2019-20.
The investors remained cautious due to increased tax on super rich, including foreign portfolio investors and buyback tax. This led to the index erasing 2019 gains. However, the finance minister rolled back the surcharge on overseas investors and the market continued to fluctuate till September. The minister followed this up by slashing corporate tax rates and Nifty surged 13.3 per cent and hit a record mark of 12,293.90 in the third week of December.
The broader markets remained under pressure as NSE Nifty Midcap 100 and NSE Nifty Smallcap 100 declined for the second consecutive year. They fell by 4.9 per cent and 10.7 percent respectively.
The gains in Nifty were led by Bajaj Finance Ltd, Bharti Airtel Ltd and ICICI Bank Ltd. Yes Bank Ltd, Zee Entertainment Ltd and GAIL India Ltd declined the most.
NSE Nifty Realty Index was the top sectoral performer in 2019 followed by Nifty Bank Index and Nifty IT Index. The Nifty Media Index and Nifty Metal Index performed the worst.
Due to the pandemic, Nifty fell vertically from 12,200 level down to 7600. While there was general fear that India might have to grapple with COVID uncertainty for a long time, the V-shaped recovery was totally fantastic. From a low of 7610, the Nifty closed at 14,000 towards the end of 2020, a 85% rally from the lows of March.
The Volatility Index or VIX or Fear Index shot up to 83 levels leading the Nifty to fall to 7600 between February and March. However, a massive monetary and fiscal stimulus helped and VIX tapered to 20 levels post September and Nifty hit 14,000.
The year also saw FPIs ignore all risks and pumped in a record Rs 167523 crore into Indian equities. Of this, 85% of the cumulative flows for 2020 came in the last 3 months.
Another huge plus was that the rupee strengthened by 5% to 73/$ between April and December. For foreign investors, this was a necessary impetus for investing in India over and above equity returns.
According to international brokerage firm Morgan Stanley, Indian sensex in its most bullish case could rally to 61,000 points by the end of 2021. However, for this to happen, it indicated that corporate earnings have to grow by 37 per cent. There was another clause that the US dollar will have to have a sustained bear market which will accelerate foreign inflows.
Given that the Finance Minister did not impose fresh income tax, budget focusing on growth through higher infrastructure spending and monetisation of government assets through proposed privatisation of two public sector banks and one insurance firm, there will be buoyancy in equity market sentiment in 2021, feel financial experts.
Future of Gold in 2021
Gold was up by 20% at the beginning of 2019. However, the 10-year return of gold was at 8.3% in that year, which was not good news to savers who were looking to invest in gold. Indian savers were still caught up in the traditional landscape where families invested in gold, hoping it will come handy during bad times. However, the analysts felt it was best to treat gold as a commodity and needed to be traded just like any commodity. Their argument was that gold like any other investment should be judged according to returns, liquidity, stability and other additional parameters. And they insisted gold did not fit into these parameters.
Also, they pointed out that unlike equity or bonds or bank deposits, the money one invests in gold does not contribute to economic growth. The savers were warned that a good business or other productive economic activity would generate wealth, which was not the case with gold. Gold would remain the same forever.
Financial experts advised people to go for paper gold as gold-backed mutual funds closely track the value of gold. As these kinds of mutual funds are open-ended funds, they can be redeemed at any point. On the other hand, if one did not mind loss of liquidity and could lock money for five years, Government of India’s gold bonds were tipped as best investments. One could get a 2.5% interest rate, the value increases with the value of gold. While interest is taxable, capital gains are tax-free.
The gold prices hit an all-time high at 55,400 for 10 gm in August 2020. There was a steady rise in prices since June 2020 when the price of gold was 45,620 at the lowest and 48,410 at the highest mark.
According to the World Gold Council, the demand plunged to the lowest in 26 years with bullion prices hitting a record high in the country. Falling disposable incomes, salary cuts and lockdown situations impacted the demand. However, the second half looked more optimistic with phasing out of lockdown which instilled confidence in urban retail buyers and good monsoon pushing rural buyers to invest in the yellow metal. India is the second largest bullion market and retail sales account for 2/3rd of total sales.
When it came to investors, they were adding more gold to their portfolios. India happened to see $98 million inflows into gold exchange traded funds around August 2020 adding to a total of $1.51 billion. Investors were largely attracted by gold’s liquidity and safe haven properties. Price increase anticipation also added to the momentum.
After reaching a record high in 2020, the gold rates have declined by nearly 20% in the first quarter of 2021. On the Multi Commodity Exchange (MCE), gold futures declined in the eight of nine trading sessions, hitting the lowest point in 10 months.
Despite this, it is a good time to invest in gold, as prices are expected to rise in future.
Future of Real estate in 2021
The realty sector saw many ups and downs in the year 2019. Real estate sector ranks third among the 14 major sectors in India that have a direct and indirect impact on all sectors of the economy. Due to the Non-Banking Financial Company (NBC) crisis, there was a liquidity crisis and slow pace of recovery in sales in the realty sector. However, on the other hand, the successful launch of India’s first RIET or Real Estate Investment Trust opened new avenues for investors. This coupled with multiple SOPs from government to the housing sector also gave a fillip to the market.
However, the market was still absorbing the impact of policy reforms of 2017, demonetisation, Real Estate Regulation & Development Act (RERA) and GST. The growth in the sector was due to a variety of factors including technology, improved ease of doing business, demand-supply dynamics and the after effect of implementation of GST and RERA. The NRI investment was expected to continue both short-term and long-term.
Affordable housing saw huge growth within the residential segment while sales in the luxury segment were more subdued. On the other hand, the commercial segment saw investments flowing, while sales in warehousing, co-working and co-living spaces gained momentum.
The year had a decent start, but the pandemic hit the realty sector real hard like all other industries and sectors. However, it was important to note that after the initial scare period, the real estate industry did a major U-turn and managed to remain buoyant thanks to various government policy decisions and the adaptation of technology. Both state and central governments announced tax holidays and reduction in stamp duties that led to the market evolving into a buyers’ market.
The real estate developers too came up with many incentives for both buyers and tenants along with providing financing and leasing options such as 10:90 and 20:80 payment plans. From mere interest, those looking for safe living spaces converted to buying.
The digital shift of the industry was lapped up by the potential customers, much to the surprise of the realtors and this created a whole new market for them. Virtual home tours, contactless agreements and payments helped both home investors and NRIs to put their money in rather lucrative home deals.
Bengaluru, Chennai, Mumbai, Pune, Hyderabad, Delhi-NCR saw an uptick in the number of properties sold during the time. With many from the workforce moving to outskirts of big cities for better amenities and safer housing and some shifting to Tier-2 cities, the realty developers responded quickly and got rid of inventories in places such as Cochin, Mangalore, Pune and outskirts of Tier-1 cities.
Some realty developers also got into property management by helping homeowners find tenants and prepare rent agreements, etc along with tackling tasks such as timely inspections, repair and maintenance. They also helped new owners with packers and movers, home cleaning, painting, repairs and even credit financing. All these proactive steps upped the buyers’ interest and helped in both home and NRI investments.
Ironically, the commercial real estate sector too saw a boost thanks to government policies and promise of lucrative returns. NRIs too found this segment worth investing in. Commercial office stock was likely to cross 600 million sq ft and office leasing spaces in major cities was expected to cross 100 million sq ft in 2020. The co-working spaces too saw a sharp rise in major cities as it reached around 3.44 million sq ft in the year. Also 7 million sq ft of retail space entered the market in 2020.
In all, industrial, retail, frontier segments such as co-working spaces did well in the hope of both short-term and long-term returns.
According to a report by Savills India, private equity investment is likely to recover tremendously in the realty segment bringing an influx of $6 billion in 2021, registering a 30% year-on-year growth.
The realty sector has to take note of the new demands of home buyers who are looking for larger spaces with various amenities and emphasis on hygiene. Also, as work from home looks like it’s here to stay for quite a while, home buyers are also demanding home office spaces. If one looks at the commercial segment, then focus will be on satellite offices outside Central Business Districts.
With some big transactions by global giants in the Noida region has given a boost to the investor sentiment within the country.
Lucrative and assured returns have further influenced the investors. With the prospect of many firms relocating to India and improvement in ease of doing business is expected to see an upswing in commercial realty sales, according to experts.
The Atmanirbhar Bharat campaign is considered to be a good sign for the realty market as the sector stands to gain from policy support by the government. The increase in foreign direct investment (FDI) is also a good push to the market.
However, the situation seems a little fudgy as stamp duty deadlines are approaching fast and this could impact the home sector if the government does not push more policy decisions.
Though all eyes were on the union budget for the year 2021-22, it didn’t offer much than the extension of incentives for interest payment on affordable homes by another year, tax incentives for notified affordable rental housing and some tax relief for dividends received from REITS.
There are about 44 AMFI or Association of Mutual Funds in India registered fund houses that offer more than 2500 mutual fund schemes in India. This gives investors a wide array to pick and choose from. However, there is no right time as such to invest in mutual funds. Any time is a good time to invest in mutual funds. All one needs is to invest as per one’s financial goals and risk tolerance.
ICICI Prudential Bluechip Fund (Large-cap), Aditya Birla Sun Life Frontline Equity Fund (Large-cap), SBI Bluechip Fund (Large-cap), Franklin India Equity Fund (Diversified), Mirae Asset India Equity Fund (Diversified), Aditya Birla Sun Life Equity Fund (Diversified), Franklin India Prima Fund (Mid-cap), HDFC Mid-cap Opportunities Fund (Mid-cap), Franklin Smaller Companies Fund (Small-cap), Franklin India Taxshield Fund (ELSS – Tax Saving), Axis Long Term Equity Fund (ELSS – Tax Saving), Aditya Birla Sun Life Tax Relief ’96 Fund (ELSS – Tax Saving) – were the best performing mutual funds in 2019.
However only two schemes SBI Bluechip Fund with assets worth Rs 23,484 crore and Mirae Asset Large Cap Fund with an AUM of Rs 16,519 crore managed to beat their respective benchmark. They outperformed the others with average returns of 11.9% in 2019.
Year 2020: ICICI Prudential Focused Bluechip Equity Fund, Aditya Birla Sun Life Small & Midcap Fund, Tata Equity PE Fund, HDFC Monthly Income Plan – MTP, L&T Tax Advantage Fund, SBI Nifty Index Fund, Kotak Corporate Bond Fund, Canara Robeco Gilt PGS, DSP BlackRock Balanced Fund, Axis Liquid Fund were the mutual funds that were considered to be the best in year 2020.
The Reserve Bank of India announced in April 2020 that a special liquidity facility (SLF-MF) worth Rs 50,000 crore will be sanctioned for easing liquidity pressure on mutual funds (MFs), which was a consequence of the lockdown in India. Due to the pandemic, the capital markets took a hit and turned volatile.
Best mutual funds to invest in, in this year. Mirae Asset Large Cap Fund, Small Cap Funds: 13.6% 3 yr return and 17.49% 5 yr return; Axis Bluechip Fund, Mid Cap Funds: 17.24% 3yr return and 17.43% 5 yr return; ICICI Prudential Bluechip Fund, Mid Cap Funds: 12.3% 3 yr return and 15.77% 5 yr return; SBI Bluechip Fund, MultiCap Funds: 12.83% 3 yr returns and 14.64% 5 yr returns; SBI Flexi Cap Fund, Balanced Funds: 11.99% 3 yr return and 15.75% 5 yr return.
In the first quarter of 2021, mutual fund investors continue to sell their investments in equity funds while there has been a recovery in debt funds on a monthly basis. The flows into open-ended debt mutual funds turned positive after seeing huge outflows in January 2021.
In terms of Assets Under Management (AUM), there has been a slight decline in the figures for open-ended debt schemes. All other categories reported a rise in the average AUMs for the month. This is till March 2021.
Bitcoin is one of the earliest forms of cryptocurrency or digital money. It works as a world-wide peer-to-peer payment system and is considered to be more secure than real money. In India, they started gaining popularity given the union government’s efforts to move towards a cashless economy. However, it has to be remembered that bitcoins are not regulated by a body like RBI. Bitcoins use blockchain technology to maintain transparency in all their transactions and this also serves as a public ledger.
The Supreme Court of India ruled that the government of India should come up with cryptocurrency regulation policies in February 2019. India’s wealthy were keen to invest in cryptocurrencies as the high net-worth individuals saw digital currencies as good investments. Till now, real estate was seen as the preferred investment for the super-rich in India, but in 2019, they were mulling over investing in cryptocurrencies. In fact, about 10 percent of them confessed they would invest in digital currencies in the next three years.
Bitcoins emerged as the best asset class of 2020, even as global stock markets crashed due to the COVID pandemic. In India, this has seen a surge in the number of new investors aged between 25 and 40. Popular cryptocurrency exchanges saw a surge in sign-ups during pandemic times as most of them wanted to invest rather than trade in bitcoins. While 80% were small-time investors, 20% were traders. Most of them wanted to hold bitcoins for periods of say 1-2 years or 3-5 years.
The total market value of cryptocurrencies breached the $1 trillion mark for the first time in January and the Bitcoin prices came up to $37,000. However, as has been historically seen, bitcoin prices have risen and fallen at a dramatic pace.
In India it is now being considered as an alternative to gold investment and the same has been corroborated by global investment houses such as JP Morgan Chase & Co. They have predicted in January that the bitcoin price could reach up to $146,000 in the long term.
Once the Supreme Court lifted the ban on cryptocurrencies, most banks were initially reluctant to deal with cryptocurrency exchanges. However, top banks such as HDFC Bank, State Bank of India, Kotak Mahindra Bank Ltd and ICICI Bank are now allowing cryptocurrency traders and investors to transact using their bank accounts. Apart from big returns, this is a positive factor for Indian customers to invest further.
Astro strategist Hirav Shah’s predictions for 2021
A pro in making market-based astrological predictions and having worked with various sectors closely, astro strategist Hirav Shah has the following suggestions for this year:
– Hirav Shah says there will be a huge upward trend in the second half of 2021.
Right now, we are in the 74th year of Independence and on August 15, we will be entering the 75th year. 75 adds up to 12=1+2=3 and this represents Jupiter. Bharat adds to number 6 and India adds to number 3. 2021 adds up to number 5 and both 5 and 6 are favourable numbers. However, due to number 5, it is likely that there will be unforeseen turbulence in the stock market, mostly before June. Meanwhile, from the second half of the year, there will be a huge surge in the stock market.
On the lower side, the index will reach 27500 points and on the upper side, it could reach 56000 points.
Banking stocks will be one of the reasons for the fall of the Index in 2021.
– Hirav Shah feels investors must consider investing in silver on a priority basis. Though he feels investing in metals would be ideal, he places his bet on silver. He sees gold prices varying between Rs 39,000 and 70,000 and silver prices varying between Rs 40,000 and Rs 90,000.
– Also, Hirav Shah shares that investing in the Telecom sector, Sugar, Insurance and Power sector would bring in high returns.