In a recent note, Axis Securities sees equities starting off on a positive note but anticipates a volatile path ahead, with macroeconomic factors continuing to dominate the stage. The brokerage firm underscores that while the initial momentum is promising, ongoing global uncertainties and domestic economic conditions could introduce fluctuations.
Constructing a Diversified Portfolio
To safeguard against market volatility and sudden downturns, Axis recommends constructing a diversified portfolio for investors of various risk appetites that spans multiple asset classes. This approach typically includes allocations to traditional assets like equities and fixed-income instruments, as well as alternative investments such as gold and other commodities. The brokerage is overweight on Equities while having ‘neutral’ calls on fixed-income assets and Gold.
Allocation Strategies
For conservative investors, Axis Securities recommends allocating 20 percent of their portfolio to equities, with a larger portion, 70 percent, allocated to debt instruments and 10 percent to gold. This allocation strategy aims to prioritize stability and income generation while providing a hedge against inflation through gold investments. On the other hand, for growth-oriented and aggressive investors, Axis Securities suggests a higher allocation to equities, with 70 percent and 90 percent of the portfolio, respectively.
Investment Recommendations
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Equities Outlook
The brokerage anticipates that market dynamics in the near term will pivot around prevailing narratives. Key drivers include the sentiment surrounding policy continuity, anticipation ahead of the Budget, the progress of the monsoon, advancements in the CAPEX agenda, fiscal consolidation efforts, and expectations for rural economic recovery in the latter half of the year. These factors are poised to shape investor sentiment and market direction, influencing investment decisions and market outcomes in the coming months.
Additional Insight:
Investors should closely monitor these key drivers to make informed decisions based on the evolving market conditions.
Fixed Income Analysis
In its June 2024 MPC meeting, the RBI opted for a status quo by maintaining the policy rate at 6.5%. The central bank reiterated its stance on gradually withdrawing accommodation while balancing growth and inflation dynamics. Governor Shaktikanta Das highlighted the Indian economy’s resilience, citing improved urban demand and positive trends in high-frequency indicators. Moreover, the RBI revised upward its FY25 GDP forecast to 7.2%, underscoring robust prospects driven by manufacturing strength, construction sector recovery, and rural segment resurgence. These factors are expected to bolster household consumption in the coming months, noted Axis.
Gold Analysis
The brokerage noted that Gold has stood out as a top performer in 2024, with prices surging 14% in INR terms and notable gains in USD as well. Over the past three months, gold prices have risen steadily, reflecting positive momentum and hitting above $2425/oz. This rally has been fueled by expectations of a rate-cut cycle, heightened geopolitical tensions, central bank purchases, and increased volatility in equity markets, it stated. The metal’s outperformance in 2022 and 2023 seems to be repeating this year. Looking ahead, gold’s prospects remain strong, supported by its inverse correlation with bond yields and favorable macroeconomic conditions, as per Axis. Given these factors, it maintains a NEUTRAL stance on Gold and recommends a strategy of ‘Buy-on-Dips’.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
In a recent note, Axis Securities sees equities starting off on a positive note but anticipates a volatile path ahead, with macroeconomic factors continuing to dominate the stage. The brokerage firm underscores that while the initial momentum is promising, ongoing global uncertainties and domestic economic conditions could introduce fluctuations.
Constructing a Diversified Portfolio
To safeguard against market volatility and sudden downturns, Axis recommends constructing a diversified portfolio for investors of various risk appetites that spans multiple asset classes. This approach typically includes allocations to traditional assets like equities and fixed-income instruments, as well as alternative investments such as gold and other commodities. The brokerage is overweight on Equities while having ‘neutral’ calls on fixed-income assets and Gold.
Allocation Strategies
For conservative investors, Axis Securities recommends allocating 20 percent of their portfolio to equities, with a larger portion, 70 percent, allocated to debt instruments and 10 percent to gold. This allocation strategy aims to prioritize stability and income generation while providing a hedge against inflation through gold investments. On the other hand, for growth-oriented and aggressive investors, Axis Securities suggests a higher allocation to equities, with 70 percent and 90 percent of the portfolio, respectively.
Investment Recommendations
View Full Image
Equities Outlook
The brokerage anticipates that market dynamics in the near term will pivot around prevailing narratives. Key drivers include the sentiment surrounding policy continuity, anticipation ahead of the Budget, the progress of the monsoon, advancements in the CAPEX agenda, fiscal consolidation efforts, and expectations for rural economic recovery in the latter half of the year. These factors are poised to shape investor sentiment and market direction, influencing investment decisions and market outcomes in the coming months.
Additional Insight:
Investors should closely monitor these key drivers to make informed decisions based on the evolving market conditions.
Fixed Income Analysis
In its June 2024 MPC meeting, the RBI opted for a status quo by maintaining the policy rate at 6.5%. The central bank reiterated its stance on gradually withdrawing accommodation while balancing growth and inflation dynamics. Governor Shaktikanta Das highlighted the Indian economy’s resilience, citing improved urban demand and positive trends in high-frequency indicators. Moreover, the RBI revised upward its FY25 GDP forecast to 7.2%, underscoring robust prospects driven by manufacturing strength, construction sector recovery, and rural segment resurgence. These factors are expected to bolster household consumption in the coming months, noted Axis.
Gold Analysis
The brokerage noted that Gold has stood out as a top performer in 2024, with prices surging 14% in INR terms and notable gains in USD as well. Over the past three months, gold prices have risen steadily, reflecting positive momentum and hitting above $2425/oz. This rally has been fueled by expectations of a rate-cut cycle, heightened geopolitical tensions, central bank purchases, and increased volatility in equity markets, it stated. The metal’s outperformance in 2022 and 2023 seems to be repeating this year. Looking ahead, gold’s prospects remain strong, supported by its inverse correlation with bond yields and favorable macroeconomic conditions, as per Axis. Given these factors, it maintains a NEUTRAL stance on Gold and recommends a strategy of ‘Buy-on-Dips’.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
