In India, the year 2021 was a mixed bag for investors: equities markets rose 20%, fixed income instruments returned 5-6 per cent, and gold prices fell 7.5 per cent. The sole noteworthy element was that the real estate market, which had been stagnant for several years, began to show indications of resurrection throughout the year. This year’s circumstances may be slightly different.
It’s five months past 2022. But still, Let’s take a look at how these asset classes are projected to fare in 2022 and how NRIs might make the most of their assets during the year.
Stock investments:
There are several reasons to be enthusiastic about India’s economic development. The increase in corporate earnings, on the other hand, is already included in the Nifty level. According to analysts, the stock market surge that began eight years ago has reached a stalemate, and future gains may not be as spectacular as they have been in the past. Many analysts believe that a reasonable market correction might drive share prices down to more acceptable levels.
In such a case, what should stock investors do? In 2022, taking partial gains in equities and equity funds and reinvesting the earnings in short-term debt instruments would be a wise decision. Fund investors should regularly put their redemption money in short-term debt funds and start transferring it into Flexi cap equity funds. They aren’t entirely out of the stock market this way.
Deposit rates have already begun to rise at several institutions. Don’t put your money in very long-term fixed deposits if you wish to invest in fixed deposits. Choose shorter terms of 1-2 years so that you may switch to higher-interest deposits as rates rise.
Purchasing gold:
Due to the US Fed’s aggressive pronouncements on interest rates, gold prices fell in 2021 and may fall much lower in 2022. The US currency has gained in the last six months, lowering gold prices. The propagation of the Omicron strain of the virus is the silver lining for gold. The consequent uncertainty might enhance gold prices if Omicron is not controlled. Buying gold in India may not be profitable for NRIs.
Due to import duties and GST, the yellow metal is more expensive in India. The customs duty on gold was slashed from 12.5 per cent to 7.5 per cent in last year’s budget, but a new cess and surcharge on customs duty mean gold is now 14 per cent more expensive in India than on the worldwide market. So, while it’s a good idea to have roughly 10% of your investment portfolio in gold, please don’t buy it in India.
Property investment:
For some years, the real estate market has been stagnant. The good news is that there are signs of a comeback. Even though house prices have only slightly increased, home loan rates have remained historically low. As a result, builders see a significant rise in customer interest and sales. The rupee’s depreciation versus the dollar and other major currencies may be the perfect chance for NRIs.
NRI purchasers should use extreme caution while purchasing residences that are still under development. Examine the builder’s track record, and don’t be fooled by promises and marketing gimmicks. Most essential, see if the project is registered with the Real Estate Regulatory Authority (RERA), which guarantees timely delivery and respect to the terms agreed upon when the reservation was made. Some developers begin marketing their projects before obtaining RERA approval. Avoid investing in such ventures.
