How to invest Rs 1 lakh in current market? Axis Securities suggests right mix of assets

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While retaining its bullish view on the Indian equity market, Axis Securities upgraded Nifty’s December 2021 target to 17,400. The brokerage believes that the equity market is likely to be the best performing asset class for the next 1-2 years. Benchmark equity indices BSE Sensex and NSE Nifty have already gained over 100% so far from the lows of March 2020.

Considering the present market condition, Axis Securities advised balanced investors to put 50% of their money in equities, 35% in debt and the rest in gold. This means, if you have to invest Rs 1 lakh amid the ongoing bull run, Rs 50,000 should go into equities, Rs 35,000 into debt and the rest into gold.

On the other hand, it advised aggressive investors to invest 90% of their funds in equities and 5% each in debt and gold. For conservative investors, Axis Securities said that investors can put 20% of their funds in equities, 70% in debt and 10% in gold.

Source: Axis Securities

Performance of asset classes

While the leadership in asset classes keeps on changing in different market cycles, gold proved to be one of the best performing asset classes in 2020. In the last 10 years, Nifty outperformed the emerging market in the 5 years and developed the market in 4 years. Nifty50 delivered a healthy 15% return in 2020 which was significantly better than the 12% return it delivered in 2019.

The performance of smallcaps stood highly volatile against other asset classes. It ranked at the bottom in 2018 and 2019 and recovered sharply in 2020, outperforming the other asset classes in the first four months of 2021. While Nifty Midcap 100 and Nifty Smallcap 100 delivered 22% and 21% returns respectively in 2020, the returns for mid and smallcap indices were negative in 2019.

“We expect a broad-based rally of 2020 to continue well into 2021 with a strong earnings revival across the board. A lower interest rate environment and higher fiscal spending will continue to support the equity markets. Union Budget for FY22 turned out to be encouragingly positive with a sharp focus on growth through capital spending. It has been a significant event as it is changing the market structure in favour of the capex cycle and the BFSI plays. The laggards of the last decade are witnessing more traction and may see increased allocation in the forthcoming quarters,” Axis Securities said.

Stocks to buy

If you are looking for some stocks for your investment portfolio, Axis Securities is bullish on players like ICICI Bank, SBI, Federal Bank, Equitas Small Finance Bank, Varun Beverages, Camlin Fine Sciences, Mold-Tek Packaging, Amber Enterprises India, Minda Corporation, Steel Strips Wheels, Lupin, Tech Mahindra, BhartiAirtel, HCL Technologies, Orient Cement, Ashok Leyland.